On December 14, dogecoin surged after Elon Musk, Tesla’s (TSLA) – Get Tesla Inc Report CEO, said the electric-vehicle maker would accept the cryptocurrency for payment.
“Tesla will make some merch buyable with Doge & see how it goes,” tweeted Time Magazine’s 2021 Person of the Year.
Edward Moya, senior market analyst for the Americas with Oanda, noted at the time that “many crypto traders are focusing on which altcoins to bet big on and Musk’s tweet served as a reminder that you can’t forget about doge as some businesses remain committed to using it.”
In addition to Tesla, the Dallas Mavericks, GameStop (GME) – Get GameStop Corp. Class A Report, AirBaltic, online electronics retailer Newegg and the luxury hotel chain The Kessler Collection are among the companies accepting dogecoin.
AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Class A Report, the nation’s largest movie theater company, announced in October it would accept dogecoin payments via BitPay Wallet.
Not bad for a cryptocurrency that began as a joke and now has a market capitalization of about $23 billion.
And there’s been no shortage of excitement, as dogecoin soared over 12,000% to an all-time high in May before dropping almost 80% by mid-December.
So what’s in store for dogecoin in 2022?
“Dogecoin’s consistent appearance in the 2021 news cycle took its price to new heights, with many folks wondering if $1 is in its future,” said Zak Killermann, fintech and crypto expert with Finder. “However, a combination of hefty amounts of DOGE being minted every day in conjunction with meme-worthy price swings makes Dogecoin a tricky investment even for the veteran investor.”
For dogecoin to hit $1, Killermann added, the total market cap of the coin would need to exceed many of the top cryptos, “something that seems unlikely to happen anytime soon.”
“Looking at dogecoin it is hard to see why it should re-test this year’s all-time high,” Nicholas Cawley, strategist at DailyFX. “Despite dropping from its 74 cents high in mid-May to around 17.5 cents now, holders of DOGE from the start of the year have still made huge gains, helped in part by various high-profile names, including Elon Musk, pushing its adoption.”
With mining supply unlimited, compared with bitcoin’s 21 million maximum limit, Cawley said, “it is hard to see why the exponential gains seen in DOGE this year will continue even if it is adopted by new vendors.”
Alex Lemberg, CEO of the Nimbus Platform, said he supports backing or participating in coins or projects that have utility, referring to digital tokens built on a specific blockchain ecosystem which grant token holders certain rights.
“It’s very hard to identify what that utility is with dogecoin and what it could be in 2022, primarily because dogecoin is meant to be a payment coin, unfortunately,” he said, “though it is a highly inflationary coin just based on tokenomics and how much of it is produced and released into the market and how often it’s released into the market.”
Ultimately, Lemberg said, “if I cannot find the utility value and it looks like the world can’t either, then dogecoin becomes a tradable asset instead of investible.”
“I don’t think that’s going to change in any way in 2022,” he said. “And I do believe that because of their tokenomics there’s only going to be an increase of pressure keeping that value of the actual coin right around the 50 or 60 cent mark, because dogecoin doesn’t bring as much value or utility or the ability to be pegged to value or utility.”
While it’s possible for dogecoin to hit a dollar in 2022, Lemberg said “it’s certainly not something that you’ll be able to predict or forecast.”
“You can trade into it, but I certainly wouldn’t look at it from an investment perspective,” he said.
