What do the crypto market and the U.S. government have in common? Both have doge. Crypto has dogecoin and the U.S. government will soon have the Department Of Government Efficiency (DOGE).
With everyone from hot-headed crypto DGNs to stone-cold politicians talking about doge, a doge rally seems inevitable and this has everyone wondering when it could happen and just how high doge could go. And that's why today we're going to do a deep dive into dogecoin, reveal who is behind its success, and tell you how a rally to one dollar and beyond has been in the works since 2019.
Disclaimer: I'll start by saying that nothing in this post is financial advice. It's purely educational content intended to inform you about dogecoin.
Table of Contents
What Is Dogecoin? How Does Dogecoin Work?
Dogecoin was founded in 2013 by Jackson Palmer and Billy Marcus. It began as a joke, specifically a tweet by Jackson that said that dogecoin would become quote "the next big thing in crypto and that's when Billy reached out to Jackson offering to make an actual dogecoin crypto".
Now Jackson agreed and dogecoin subsequently launched in December 2013. As a fun fact, dogecoin is a fork of crypto called luckycoin which is itself a fork of litecoin and of course, litecoin is a fork of bitcoin and this is where things get interesting. In 2014 litecoin founder Charlie Lee basically convinced Dogecoin's developers and the Dogecoin community to merge mine doge and LTC.
Without getting too technical, merge mining makes it possible for miners to secure two blockchains at once without additional costs. The reason why dogecoin stakeholders agreed to merge mine doge and LTC was simply because the dogecoin blockchain probably wouldn't have survived otherwise. The result is that litecoin and dogecoin essentially merged at the hip and this is where things get truly interesting.
In 2021 we speculated that the biggest dogecoin whales were probably litecoin miners and this is just because litecoin miners seem to have mined most of doge's supply and as it happens most crypto miners are based in China. More on that later. Now besides merge mining what makes doge unique is the fact that it was fairly launched just like Bitcoin's BTC and this means that there was no ICO.
Doge's supply was mined from zero by early adopters and its original purpose was to be used for tipping, donations, and to a lesser extent payments. Under the hood, dogecoin uses a proof of work blockchain that can process around 30 transactions per second. Blocks are generated every minute or so and each block contains 10 000 doge as a block reward and this means that doge's supply is increasing by 5 billion per year. Note that there is no maximum supply here.
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Does Elon Musk Control Dogecoin?
Now this is where things get interesting yet again. After the initial hype in 2014, dogecoin effectively went into hibernation. Jackson left the project and Billy stepped back. Nevertheless, Jackson has occasionally popped up to spread fud about crypto whereas Billy has constantly been spreading FOMO.
After a decent performance during the 2017 crypto bull market doge came back into the spotlight in 2020 after a TikTok trend. Then dogecoin became the main character in 2021 when Tesla and SpaceX founder Elon Musk started tweeting about it and his associated companies started accepting doge as a payment. However, Elon's involvement with dogecoin goes much further back than 2021.
Some of you might remember that the Dogecoin Twitter account posted a poll in 2019 asking its followers who the best hypothetical Dogecoin CEO would be. They voted for Elon and he said dogecoin was his favorite crypto. It wasn't until 2021 that it was revealed that Elon was more than just a fan of dogecoin.
In an exclusive interview with Decrypt dogecoin developer Ross Nickel revealed that Elon had been actively speaking with Dogecoin's developers since 2019. In other words, Elon was involved in Dogecoin long before 2021. Oddly enough Ross stepped down as director of the Dogecoin Foundation in February 2022.
For context, the Dogecoin foundation was established way back in 2014 but was practically dead until August 2021 when it was revived. In a blog post, Ross explained that he was stepping down primarily due to stress. As to what was causing this stress Ross highlighted that quote the foundation is operating in an extremely challenging environment.
Although Ross didn't specify what exactly this challenging environment was, reading between the lines suggests that it was related to crypto regulations. Further evidence for this can be found in a blog post about Dogecoin's development posted to the Dogecoin foundation that same month. The blog post specified that the project was facing three existential threats.
The first of these was quote bad faith actors are trying to claim the Dogecoin brand and this appears to be a reference to Angel Vercetti known as an unofficial third co-founder of Dogecoin who claims to own some of Dogecoin's IP. His LinkedIn info for dogecoin has an eye-opening message quote forgive me doge for I have betrayed you by having brought you to Elon who promised to do good to dogecoin. I will make doge great again and we will not advertise cybertrucks there.
We'll also come back to that one a bit later. Anyways the second and third existential threats facing dogecoin are a shortage of developers and regulatory scrutiny. Newsflash but these two are linked.
For reference regulators have been going after developers of crypto projects. The most evident example here is tornado cash. Taken together this suggests that dogecoin was facing regulatory scrutiny in 2022 and Elon's acquisition of Twitter that same year probably added fuel to the fire.
For those unaware Elon was sued in June 2022 for allegedly manipulating Doge's price with his posts. The lawsuit was dropped only very recently and this might have something to do with the fact that Donald Trump was elected as the next US president and Republicans won the election by a landslide. Besides the fact that Elon is one of Trump's biggest backers the red wave means that good crypto regulations are coming and that's good news for Doge.
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DOGE Price Analysis And Prediction
And this brings me to the part you've all been waiting for and that's Doge's price action. Not surprisingly doge experienced a massive pump after Trump won the election in November and most of you will know that this is because of the aforementioned Department of Government Efficiency or doge for short. For those unfamiliar the doge is an initiative by the Trump administration to cut regulations and unnecessary spending to reduce the national debt and will increase government efficiency.
On November 12th trump announced that Elon and entrepreneur Vivek Ramaswamy would lead the doge. As another fun fact, Cantor Fitzgerald CEO Howard Lutnick was the one who actually came up with the idea to call it doge and FYI Cantor Fitzgerald manages the reserves for Tether's USDT, the largest stablecoin by market cap, and Tether also has close connections to the crypto mining industry. Again more on that later.
Now doge the crypto went vertical leading up to the announcement that Elon and Vivek would lead the doge government initiative and has since been chopping sideways at least at the time of writing this post. A small pullback could come next given the big rally and it could have happened by the time this post is published. The longer-term price chart is where things get interesting once more.
From a technical perspective, it looks like doge could be setting up for a massive cup and handle pattern and this means it could experience a sizable correction sometime later this year or early next year before exploding higher later in 2025. What happens between now and then depends not only on any news related to the doge but also on any news related to crypto regulations particularly as regards to the SEC. You'll recall that dogecoin seems to have faced regulatory scrutiny in 2022.
Come to think of it that would explain why it was sleeping throughout 2023. In any case, this is significant because it means that when Gary Gensler steps down on the 20th of January next year we could see some pro-crypto regulations come to the fore and this could trigger multiple dogecoin-specific catalysts such as asset managers filing for a spot dogecoin ETF. Believe it or not but this could also happen sooner rather than later and that's according to Bloomberg ETF analyst Eric Balkunas who's been closely tracking crypto's ETFs since last year.
Not only does Eric think a spot dogecoin ETF filing is inevitable but he's also quote actually surprised it hasn't been filed already.
How high could Doge go in this cycle?
Well from a technical perspective if that cup and handle pattern does play out then Doge could rally over one dollar and this would make sense given that one dollar is a key psychological level and Wales will likely try to push prices above one dollar to suck retail in. To put things into perspective a rally to over one dollar would give dogecoin a market cap of close to 150 billion dollars and this would be very surprising and yet it's very possible particularly if a spot dogecoin ETF is filed and approved.
Heck the spot ETF filing itself could be enough to push Doge's price above one dollar. If you take a step back though you realize that a doge rally to over a dollar would only be around a 3x from the current price. At this stage in the cycle, you could arguably find bigger gains with lower-risk cryptos like ETH that have been badly lagging the rest of the market and will eventually hopefully catch up.
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Dogecoin Proof Of Stake Controversy And Roadmap
Now whether Doge could hit a dollar or more ultimately depends on dogecoin's upcoming milestones and as it so happens the dogecoin foundation has an official trail map for dogecoin.
As far as we can tell there's only one milestone that hasn't been met yet and that's likely because it's the most controversial. That's the proposal to transition doge from a proof of work to a proof of stake. This is where things get interesting yet again and where all that stuff about litecoin miners and tether starts to come back into the picture.
Back in 2021, Elon said Tesla wouldn't accept BTC for payments due to its mining emissions. Logically then you'd think that Elon would be in favor of Dogecoin transitioning from proof of work to proof of stake given that the proof of stake consensus mechanism is lauded as being more environmentally friendly. While many media outlets have speculated that this is the case it doesn't seem to be true.
According to Cointelegraph Elon's quote collaborated with Dogecoin stakeholders to reduce its mining emissions by 25 percent in 2022 and this is fascinating because you'd think he would advocate for Dogecoin to transition to proof of stake for the reasons I just mentioned. Instead, he opted to optimize the mining. What's even more fascinating is that Elon did the exact same thing for Bitcoin.
He didn't advocate for it to transition from proof of work to proof of stake to be more environmentally friendly. Instead, he opted to optimize Bitcoin mining to reduce emissions. At the same time, one of Dogecoin's main developers has threatened to quit if Dogecoin does transition to proof of stake.
This suggests that there are very powerful stakeholders within dogecoin's ecosystem that do not want it to transition to proof of stake and in case it wasn't clear enough we reckon these powerful stakeholders are litecoin miners who have been making an absolute killing merge mining doge.
This is where things get truly fascinating because Tether has reportedly become a very big player in the bitcoin mining space and in case it wasn't obvious enough many of the largest bitcoin miners also became the largest litecoin miners when LTC started and I'll remind you that LTC is merge mined with doge. When you recall that the CEO of the company that manages Tether's reserves came up with the doge acronym the full picture starts to come together.
Doge pumping fundamentally benefits crypto miners and the largest stablecoin issuers which have strong ties to the biggest crypto projects and companies. However, the only missing piece of the puzzle is the doge father himself, and as I hinted earlier the thing that links all these entities together is their ties to China. Tesla fans will know that it opened its first factory in China in 2019 and Tesla stock analysts will know that around a quarter of Tesla's revenue comes from China.
Elon fans will know that he's shied away from questions about how Tesla's connections to China could affect his decisions and Elon critics will know that US politicians allege that Elon's ties to China were a quote national security risk as recently as last week. Naturally, the intent was to smear Trump. Anyhow if you need evidence that the crypto mining industry is closely affiliated with China look no further than Bitmain, a Beijing-based company that provides as much as 90 percent of all crypto mining machines.
Now consider that 55 percent of Bitcoin's hash rate still comes from China despite the mining ban. As for Tether, its sister company the Bitfinex exchange was originally based in Hong Kong and reportedly had Chinese shareholders. Meanwhile, USDT was once partly backed by Chinese commercial paper per Howard's own admission and you'll remember his company now custodies USDT's reserves.
That's a long-winded way of saying that powerful forces namely the Chinese crypto mining industry and its affiliates do not want Dogecoin to transition to proof of and want Elon to continue pumping Doge so they can make big profits.
I'll reiterate that the largest Dogecoin whales are probably crypto miners and never mind the fact that TikTok, the social platform where the Doge trend originally began, is also a Chinese company.
Dogecoin Challenges
And this brings me to the part that... none of you have been waiting for and that's the challenges that Dogecoin could face in the coming months.
And the first challenge is the elephant in the room and that's Dogecoin's ties to China. Make no mistake this is an attack vector that will be used by crypto critics. More importantly, it's something that could hold back Doge's price action during the crypto bull market.
Not sure if you've noticed but China's economy isn't doing too well these days and given how intertwined the crypto mining industry is with China, economic pressure could translate to extra cell pressure for Doge. As one more fun fact, all the old BTC and ETH we've seen waking up may be coming from wealthy Chinese investors rummaging through their hard drives to see if they have a few million dollars worth of crypto lying around that they can use to pay down some debts. And this could include Doge too.
And this ties into Dogecoin's second challenge and that's competition. Even though Dogecoin is technically more than a meme coin that's probably not what the average Doge holder believes. On the contrary, the average Doge holder is probably aping in because of the meme itself and could rotate into other memes.
Conversely, Doge holders could rotate their Doge into regular altcoins as it approaches or passes one dollar. That's exactly what they did in the last cycle and even though history doesn't repeat it does rhyme. It would be truly depressing if the rhyme was that they rotated their profits into other memes.
And this relates to Dogecoin's third challenge and that's centralization. Not of its blockchain but its ecosystem. It wouldn't be far-fetched to say that Doge's success hinges on Elon's actions.
In fact, you could almost say that Doge is about to be merged with something else too. The department of government efficiency in 2025. If Trump's Doge initiative never gets off the ground this could be devastating for Doge's price.
Alternatively, if it gets off the ground without a hitch then Doge could reach ridiculous highs. Imagine a scenario where Doge gets a spot ETF, a publicly traded company buys it and X integrates it. This could send Doge well above one dollar.
Objectively speaking the chances of this happening seem to be reasonably high as things stand today. There are so many bullish catalysts coming up for Dogecoin in 2025 and it would be foolish to fade Doge despite the admittedly concerning connections to China. As the saying goes do you want to be right or do you want to make money? Doge could in fact be the best proxy for betting on the crypto market's performance under a Trump presidency for better or for worse.
But I'd be remiss if I didn't repeat that there are probably better ways to bet on this. There are literally dozens of high-quality altcoins that are waiting to follow Doge with an epic rally of their own. It goes without saying that not all of them will rally as much as Dogecoin but it's also safe to say that everything will rally. As always it's just a question of when and how much. Don't forget that.
