OverTraders.com is committed to arming traders and investors with the best possible information about the financial markets. This article takes a deeper look at the intriguing Dogecoin (DOGE) dynamics. It looks at the role of political decisions and economic policies on the value and stability of the dollar. By taking all of these factors into consideration, readers can gain valuable insights into the highly volatile world of cryptocurrencies and position themselves for smarter investments.
Understanding Dogecoin
What is Dogecoin?
Dogecoin (DOGE) is currently the largest Proof-of-Work (POW) meme coin, sitting in the second spot right below Bitcoin. Litecoin grabs the top three honors in this category. Unlike other meme “tokens” that run on compatible or other’s blockchains, DOGE runs on its own native blockchain. This singular feature makes it standout not just in the web3 space, but within the entire cryptocurrency ecosystem.
Then there’s the distribution of DOGE. A small number of holders dominate a large percentage of the entire circulating supply. In particular, the top 115 holders own 65.4% of all circulating supply, with Robinhood accounting for 21.06% of that on its own. This high level of concentrated ownership creates serious concerns about market manipulation and known destabilizing effects.
In addition, DOGE has an inflationary model. It releases the equivalent of 5 billion new coins every year at a fixed rate. This is in contrast to cryptocurrencies such as Bitcoin and Litecoin, which have fixed maximum supplies. DOGE is inflationary, meaning its total supply will continue growing indefinitely. This dangerous increase may undermine its value over time.
How much has Dogecoin climbed?
To better understand DOGE’s historic evolution, let’s break the history down into several major periods. For Dallas, 2017 has been marked by community-driven growth and an established culture of charity. In late 2024, following some major price increases for DOGE, it began to affect the stock market. This dramatic boost was largely thanks to what others have dubbed the “Trump and Musk effect” during the U.S. election cycle.
Recent developments have caused significant market movements in DOGE. Between April 3 and April 7, 2023, Twitter rolled the dice. They replaced their bird logo with a Doge meme for their desktop users, causing a spike in Dogecoin’s price. Just like with Dogecoin, tweets from Elon Musk have resulted in sharp increases in the cryptocurrency jacket’s value.
During that period between the 25th and 29th of October, DOGE skyrocketed. In fact, it increased by up to 46% due to the impact of Musk’s Twitter outbursts! The market was initially most excited by the proposal for a new Department of Government Efficiency (DOGE). It predicted that Elon Musk and Vivek Ramaswamy would be front runners, and this relationship shaped the price movement. X (formerly known as Twitter)’s official account temporarily changed its logo to Dogecoin’s symbol earlier this year. This action caused an upsurge of speculation and subsequent market frenzy.
Factors Influencing Dogecoin's Price
Why is it climbing so much?
A few key factors explain these price swings with Dogecoin. As we touched upon last week, celebrity endorsements—especially with the right millionaire (ahem, Elon Musk, ahem)—go a long way. Just like Musk’s tweets and deeds that affect DOGE prices, sometimes by hundreds of million dollars in market capitalization within minutes.
Political optics—especially executive branch events and announcements—influence things as well. The market responded positively enough that the eventually proposed Department of Government Efficiency (DOGE) doggedly Further, the logo switcharoo on X revealed, again, just how much political news can affect the price of cryptocurrencies. These processes are compounded by speculation and social media sentiment, which accelerate price fluctuations and contribute to a hyper-volatile market environment.
Moreover, the prevailing trends in the cryptocurrency market as a whole and investor sentiment affect DOGE’s price. Positive news about the overall crypto market or increased adoption of digital currencies can lead to a general rise in prices, benefiting DOGE along with other cryptocurrencies. On the other hand, bad press or a correction in the overall market will do just the reverse.
Musk’s Role in the DOGE Department
At first, the market interpreted the introduction of a potential new Department of Government Efficiency (DOGE) to DOGE’s rise. That’s exactly the effort being led by Elon Musk and Vivek Ramaswamy. This correlation underscores how DOGE’s value is heavily influenced by the tweets and behavior of celebrities and influencers.
On November 14, 2016, president-elect Donald Trump took the country by storm with a thrilling piece of news. Butulism announced that Elon Musk and Vivek Ramaswamy would be leading the new Department of Government Efficiency—DOGE for short, an acronym inspired by Dogecoin. This announcement sent hopes and dreams soaring among DOGE investors as the expected increased utility pushed the price of the crypto to unexpected heights.
The market’s reaction further highlights the need to understand and anticipate how political and economic factors can actively affect the value of cryptocurrencies. The proposed department’s link to cryptocurrency might seem largely symbolic. Judging by the market’s reaction, it is clear that even these indirect connections can make a huge difference.
The Unusual Nature of Dogecoin
This all sounds weird.
Dogecoin’s unusual features have been a compelling case study in the ever-evolving cryptocurrency ecosystem. Unlike BTC and LTC, DOGE has an inflationary model, issuing a constant 5 billion new coins per year. The constant issuance creates an inflationary counterpoint to the capped supply of other cryptocurrencies, which some believe could threaten Tether’s long-term value.
DOGE has proven robust in its network hash rate, consistently increasing through merged mining despite DOGE’s inflationary design. This increase alone renders 51% attacks prohibitively expensive and incredibly increases the security of the blockchain. This added security is an important factor in keeping the integrity and trustworthiness of the DOGE network.
The significant concentration of DOGE holdings among a small number of wallets raises market manipulation concerns. The 115 largest holders have the potential to greatly influence the total circulating supply. If ever they decide to sell or transfer their coins, it can cause significant price volatility.
Is the Shiba Inu meme getting special treats?
The connection between DOGE and the Shiba Inu doge meme further confuses DOGE’s identity. Its meme-based origin has helped fuel DOGE’s popularity and furthered its recognition. This begs the question of whether it can maintain its reputation as a legitimate cryptocurrency, especially in the long term.
The temporary replacement of Twitter's bird logo with the Doge meme in April 2023 demonstrates the power of memes in influencing cryptocurrency prices. This event, along with Musk's tweets and endorsements, highlights the extent to which DOGE's value is tied to internet culture and social media trends.
The long-term sustainability of DOGE as a cryptocurrency goes beyond memes and celebrity endorsements. Technological development and business adoption will be the two biggest factors that shape the future success of this technology. Further, regulatory clarity will similarly be determinative in this outcome.
Recent Updates in the Cryptocurrency Market
Finance Magnates Daily Update
In early February 2025, Bloomberg analysts James Seyffart and Eric Balchunas assessed the approval odds for four major cryptocurrency ETFs: $SOL, $DOGE, $LTC, and $XRP. The analysts’ overall assessment provides helpful guidance into the current state and future potential for greater institutional investment into these cryptocurrencies.
While there are already ways to invest in DOGE, approval of a DOGE ETF would open the door to a much wider group of investors. This new accessibility could inflate its value and increase its market cap. Unprecedented regulatory challenges and a highly volatile and immature crypto market continue to make ETF approval an uphill battle.
The analysts’ evaluation further highlights how crucial it is for regulators to keep in touch with developing market realities and technological innovations in the burgeoning cryptocurrency ecosystem. Meanwhile, the risks of investing in cryptocurrencies like DOGE are real and should make investors think twice before putting their money on the line.
Political Backing and Its Impact on DOGE
Much like the episodes of 2024, these actions showed just how much political support could drive Dogecoin’s value. On August 29, 2024, billionaire Elon Musk and his EV company Tesla scored their biggest victory yet. A federal lawsuit accusing them of defrauding investors through their promotion of Dogecoin and for the insider trading that cost billions in losses was thrown out. This legal victory effectively gave Musk even more clout over the DOGE market.
By the end of 2024, Dogecoin was up over 100x. This spike, exacerbated by the so-called “Trump and Musk effect” amid the U.S. election cycle, illustrates how quickly newsworthy political events and endorsements can affect cryptocurrency values. This second correction, with a drop of more than 60% proves how risky and unpredictable the cryptocurrency market is at this time.
Taken together, these occurrences make a strong case for more rigorous research. Whether you’re looking to buy Bitcoin or any other cryptocurrency, it’s important to understand what drives crypto prices before investing. Political endorsements, like celebrity endorsements, can produce instant success but don’t ensure lasting victory.
OverTraders.com remains committed to providing traders and investors with the knowledge and tools necessary to navigate the complexities of modern markets. By learning what drives Dogecoin’s price, you will have more knowledge to make better decisions and protect your risk.
