Dogecoin (DOGE -5.02%) was created as a joke by two friends in 2013. Cryptocurrency was becoming very serious back then with the rise of Bitcoin, and they wanted to lighten the mood. The Doge meme was sweeping the internet at the time, and they used it as inspiration to launch Dogecoin.
It went on to become one of the world’s most valuable cryptocurrencies in 2021 when its market capitalization topped $90 billion, helped by influential figures like Elon Musk who started promoting it online. But Dogecoin failed to find a real use case, and since speculative frenzies never last, the meme token lost 90% of its value by mid-2022.
Investors spent the next two years licking their wounds, until Dogecoin staged another incredible rally when Donald Trump won the presidential election last November. It failed to surpass its all-time high, but it did end 2024 with a whopping 251% gain.
The meme token is now crashing once again, leaving investors feeling a sense of déjà vu. So is this a buying opportunity or the start of a much steeper decline?
Trump and Musk: Double-edged swords for Dogecoin
Tesla Chief Executive Officer Elon Musk has supported Dogecoin since 2019 by regularly posting memes on social media and engaging in banter with other enthusiasts. The token really gathered momentum in 2021 in the lead-up to his appearance on Saturday Night Live on May 8, where he participated in a Dogecoin-themed skit.
In fact, Dogecoin rose to a price of $0.73 that very night, which translated to a gain of 15,769% for the year. Unfortunately, it also happened to mark the peak. Investors quickly realized Musk didn’t have a concrete plan to back up his promotional activities, and as I mentioned earlier, the meme token proceeded to lose 90% of its value by mid-2022.
Fast-forward to 2025, and Trump is working on his promise to make the U.S. the crypto capital of the world. Under his watch, the Securities and Exchange Commission (SEC) is withdrawing or pausing some of its active cases against crypto exchanges and related businesses. Plus, the president established a strategic Bitcoin reserve and digital assets stockpile, which could see the U.S. government become an active buyer of cryptocurrencies one day (with approval from Congress).
But Dogecoin investors were whipped into a frenzy for another reason after Trump’s election win. The president established the Department of Government Efficiency, or DOGE, shortly after he took office, and appointed Musk to run it. It focuses on finding wasteful government spending to help shrink the national debt, and its name is a clear reference to Musk’s favorite cryptocurrency.
But the Trump administration has been a double-edged sword for Dogecoin. On April 2, Trump announced a 10% tariff on all goods imported into the U.S., and he also revealed plans to impose larger reciprocal tariffs on imports from specific countries. Tariffs don’t directly affect digital goods or assets like Dogecoin, but stocks and cryptocurrencies tumbled across the board as investors flocked to the safety of cash out of fear that slower economic growth might be around the corner.
As a result, Dogecoin crashed below $0.20, and is currently down 66% from its recent 52-week high of $0.47.
Image source: Getty Images.
Fundamentals matter
Although the tariffs helped accelerate Dogecoin’s decline, it was really trending lower because of a series of structural issues. First, consumers and businesses simply haven’t adopted it as a payment mechanism, which means demand only comes from speculative investors. According to crypto directory Cryptwerk, just 2,095 businesses around the world accept Dogecoin as payment for goods and services.
Second, Dogecoin has a supply issue. There are 148.8 billion tokens in circulation, and while there is a cap on how many new tokens can be issued each year, there is no official end date. In other words, new Dogecoins will be minted in perpetuity. I can’t think of a single investment-grade asset with an unlimited supply that has delivered positive returns for investors over the long run, and this meme token probably won’t buck that trend.
Déjà vu for long-term Dogecoin supporters
Since Dogecoin’s latest speculative rally topped out at $0.47, which was way below its 2021 high of $0.73, it appears investors were being more cautious this time around. The meme token now is trading at just $0.16, but history suggests there could still be some downside ahead because it bottomed out at $0.06 after its last collapse in 2022.
That would imply a further loss of 65% from here, and since nothing has fundamentally changed for Dogecoin during the past few years, investors simply can’t rule out that scenario.
There is no indication that Dogecoin will play a role in the Department of Government Efficiency, nor is there any sign investors want to own it as a hedge against tariffs and trade tensions, despite the fact the meme token isn’t directly affected by them.
As a result, this feels a lot like 2022, which means the recent decline probably isn’t a buying opportunity. Investors might want to steer clear instead.
