Here’s One Reason Why Dogecoin (DOGE) Could Hit A Dollar

There’s probably no cryptocurrency community more welcoming than that surrounding Dogecoin (DOGE). It’s the coin that was set up as a bit of a joke but that subsequently became, somewhat by accident, a major player in the space during the early days and rocketed in both popularity and value as a result.

DOGE Daily Chart

Over the last year or so, however, DOGE has somewhat taken a back seat and regained its place as a community-driven fun-coin. In the process, market capitalization (and, by proxy, price), has declined.

Well, sort of.

In September, DOGE went for $0.0008. This week, the coin hit $0.0086. That’s a run of close to 1,000% and it’s one that’s sparked a wave of renewed interest in the coin and the community that underpins it. Market capitalization sits at $976 million and daily trading volume (so, over the last twenty-four hours) hit $151 million at last count. For long-term HODLers, the potential for a near-term $1 billion market cap is an exciting one.

So what’s getting everyone excited about this coin right now and, just as importantly, what’s next?

We’re going to answer these questions one at a time.

The run we are seeing right now is largely down to the fact that, on December 4, DOGE became four years old. In the crypto space that’s practically ancient and that it’s avoided the crypto-death pile, even against a backdrop of numerous scams, is reason enough to cheer the event.

And this increased attention is having a sort of snowball effect. Major news outlets are picking up the story that the world’s friendliest crypto community is finally getting their long-awaited reward and this in and of itself is attracting more and more speculative buy volume to the coin – just take a look at the twenty-four-hour volume figure as confirmation of this statement.

A birthday and a bit of increased attention, of course, aren’t going to support this run longer term, so surely DOGE is in for a correction as we head into the end of 2017 and beyond, into next year – right?

Well, not so fast.

There’s one thing we really like about this coin that sets it apart from pretty much every other major coin on the market today and it’s going to seem a little counterintuitive from a value increase perspective but stick with us – it’s got an inflationary system built in.

Inflation? Surely inflation is bad? Increased supply (and we’re talking more than 5 billion extra coins hitting the market annually) should lead to a weakened price as compares to other, non-inflating cryptocoins – that’s true.

On the other hand, however, there’s a real advantage to an inherent inflationary quality in a cryptocoin and that is that it promotes spending. We’re seeing issues right now in bitcoin because people are just holding large amounts as the basis of speculative long-term investment positions. DOGE, on the other hand, becomes less valuable the longer you hold it (absent of any price increases, of course) and this serves to incentivize spending. This, in turn, has led to its resurgence as a microtransaction asset, which is what drove the coin’s initial popularity a few years back.

DOGE is trading hands as rewards, payments, all these sorts of things, and the network (and, in turn, price) is benefiting as a direct result.

And it’s for this reason that we think there’s plenty more run room left in DOGE. We’re at just shy of a penny right now but, based on the inflationary theory outlined above and the increased transaction activity that this inflation incentivizes, there’s no reason why the coin can’t trade ten times or even one hundred times higher than its current price.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Image courtesy of Aranami