Why Dogecoin Is So Cheap?

Find out why Dogecoin is extremely undervalued

Last Updated January 6th 2022

7 Min Read

Although Dogecoin was on an uptrend with a series of new milestones along the way last year, its price is still relatively cheap. Now, this does not mean that the coin has low value or not worth investing in. In fact, DOGE neared an $80 billion market cap in May 2021 after growing by about 14,000% then.

Usually, a low price doesn’t mean a low valuation. For instance, IOTA, which currently trades at around $1.18 has a market cap of about $3.27 billion, compared to Dogecoin’s $20 billion while selling at $0.15, according to CoinDesk. This is because there is fewer IOTA in circulation (2.77 billion) compared to DOGE (132 billion).

Despite this success, the fact that Dogecoin’s price is still cheap and low while its market cap is staggeringly high baffles many, especially investors who are just getting their feet wet.

Experts predict that the price of Dogecoin will likely rise again at some point in the future. But before you conclude from this historical deduction, there is more to why DOGE is considered cheap at its current market price.

We prepared this guide to explain why Dogecoin’s price is so cheap and whether it is expected to go higher any time soon.

Before that, we need to cover two things that will create a good foundation for adequately answering this question. These are Dogecoin’s price history and its current price and market valuation.

Dogecoin Price History

For this part, we will be using data from CoinDesk to give a brief overview of how DOGE has grown over the years and why its price has remained relatively low despite being one of the few successful first-generation cryptocurrencies.

Dogecoin was founded in December 2013, and towards the end of the year, it was trading at around $0.00026. For the first three years, Dogecoin price remained low and stagnant until around 2017, when it started to seriously rise. This was due to the market-wide uptrend that saw many cryptos increase in value.

When your look at the price chart over at CoinDesk, Dogecoin shows almost a flat line from 2019 to 2020. That is because from January 2019 to the end of 2020, Dogecoin bounced between $0.001 and $0.0004 with very little talk around it.

However, after the 2020 coronavirus crush, the coin started rising again in early 2021, starting at a low price of $0.004741 and rising as high as $0.05179 by the end of January.

By February 10th 2021, DOGE had surged as high as $0.08, then stabilized for a short period before embarking on its biggest spike yet. Between April 14th and April 21st, Dogecoin jumped from $0.0924 to $0.335, representing a 263% increase within a week.

The price then dropped to around $0.24 then shoot again to its current ATH of $0.74 on May 8th. From there, it dropped and is now trading at around $0.15.

Although this looks like a strained growth, it is actually a pretty huge leap for a cryptocurrency. This growth has made Dogecoin one of the most valuable digital assets, and at some point, it surpassed giant companies like Dell by market capitalization.

So, why has its price remained low despite its parabolic growth? Why isn’t it growing as fast as Bitcoin and Ethereum? Does this mean that Dogecoin is not a good investment?

Let’s go over these questions below.

Don't Miss: Dogecoin Price Predictions

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Why Is Dogecoin So Cheap?

There are a number of reasons why Dogecoin’s price has remained cheap and low over the years. However, only one factor plays a major role: inflation. Unlike Bitcoin and other coins that have limited the supply of their coins, Dogecoins are limited and therefore vulnerable to inflation. About 10,000 coins are added daily to the supply by Dogecoin miners.

As a result, there is an astronomically high number of coins in circulation. For instance, there are currently about 132 billion Dogecoin in circulation, meaning that more than 5 billion coins are added to the network every year.

Based on the law of supply and demand, such a high number of coins in circulation usually means the supply is much more than demand resulting in a continuously low price.

On the other hand, Bitcoin, whose code was used to create Dogecoin, has capped its supply at 21 million coins. Already, 18.9 million coins have been mined, with only about 2.1 million remaining. The last coin will be mined in 2140. With such a low supply and insanely high demand, Bitcoin price will keep rising as more investors buy and hold their stash.

Let’s do quick math to understand better why Dogecoin is having a hard time lifting its price.

Currently, the aggressive Dogecoin community is rallying for the coin to close the year at $1 or above. Let’s assume this happens early next year when there are 132 billion DOGE in circulation.

That would take Dogecoin’s market cap to about $20 billion (price per coin multiplied by the number of coins in circulation). In comparison, Bitcoin currently has a market cap of $1 trillion.

So, let’s say Dogecoin miraculously surpasses Bitcoin and becomes the worlds largest cryptocurrency by market cap next year (assuming that Bitcoin’s market cap will be $1.5 trillion soon). Even then, it would be hard for DOGE to go above $15 per coin even if we go as far as to disregard its inflationary nature.

Here is why.

If Dogecoin were to reach a $1.5 trillion market cap in 2022 when there are 135 billion DOGE in circulation, its price would be:

Price = Market Cap / Circulation.

That is $1.5 trillion (or 1500 billion) divided by 135 billion coins which comes to $11.11 per DOGE. It would only take a miracle for a leading cryptocurrency to be priced so low.

That is why Dogecoin will remain cheap for a very long time. This is because, with time, the number of coins in circulation will be too high compared to demand. This will bring the market cap and subsequently the price even lower. Considering that, in reality, Dogecoin will not be hitting a $1 trillion market cap any time in the foreseeable future, its price will remain below or slightly above $1 for quite some time.

Should I Buy Dogecoin While It Is Still Cheap?

It’s natural to want to hop aboard the Dogecoin bandwagon while the price is still cheap. Most investment advisors even encourage it if you don’t have stacks of cash to put into Bitcoin.

But is this a good idea?

Due to its inflationary nature, Dogecoin is not considered as a store of value like deflationary cryptocurrencies ( Hello, Bitcoin). For this reason, big institutions are not buying and hodling large amounts of Dogecoin as much as Bitcoin. As a result, many DOGE will remain in circulation, and the price will remain low.

Experts recommend buying Dogecoin while the price is still low. However, hodling it might not be a good idea since there is a good chance that the price might be lower in future. So, the best thing to do is trade it and take advantage of the current price action.

The best part is, if you invest in Dogecoin CFDs, you can profit from both price directions by simply predicting the next price movement.

Is Dogecoin Worth Buying?

In terms of fame, Dogecoin DOGE is quite exposed to overall market observers. Formerly holding the title as fourth-largest cryptocurrency by market cap, many critics claim that Dogecoin is almost as popular as Bitcoin and Ethereum.

Investing in DOGE like any other asset, does not guarantee profit immediately. However, some have made the prediction that by 2025, Dogecoin could reach $6. This is pretty exciting for all eyes concentrated on Dogecoin asset. Another prediction claims that by 2025, Dogecoin could even reach $10, which will likely attract the attention of tech-savvy individuals in every corner of the planet.

Will Dogecoin Bounce Back?

Dogecoin continues to expand globally in 2022 and is focused on doubling profit. Market Haven suggests that 2022 could be one of the best for Dogecoin. They determine that DOGE price is bound to bounce back since Dogecoin has a capacity to achieve just as much as Bitcoin and Ethereum.

However, investing in crypto assets is always uncertain as the market is unpredictable. Despite this, forecasts for Dogecoin’s value are largely positive, and shows that we may see an uptrend in value in the future.

Conclusion

Dogecoin’s inflationary nature and the fact that whale investors are not taking it seriously are just some of the reasons why DOGE price will remain cheap for a long time.

Being not a store of value per se, investors don’t hold it for long periods of time. Most people sell it after a few days or weeks of buying, and this also contributes to lower prices since the number of coins in circulation will remain high.