2024 was a fantastic year for investors all around. The S&P 500 and Nasdaq Composite gained 23% and 29% respectively, supported by strong tailwinds in technology, healthcare, and energy in particular.
However, another asset class that held up strongly last year was cryptocurrency. Bitcoin‘s price soared by 120% and reached new all-time highs. And yet, another cryptocurrency fared even better.
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Dogecoin (CRYPTO: DOGE) skyrocketed by 251% in 2024, handily outperforming the S&P 500, Nasdaq, and even the king of the crypto realm, Bitcoin.
I’m going to explore what influenced the meteoric change in Dogecoin’s price. Additionally, I’ll outline why Jan. 20 could be an important date for the cryptocurrency and assess whether now is a good time for investors to buy.
Dogecoin has been on an epic run, and…
The chart below illustrates Dogecoin’s price action over the last year.
Dogecoin Price data by YCharts
As the chart shows, the price of Dogecoin really began to kick into gear around early November. In fact, since Election Day (Nov. 5), the price of Dogecoin has gained 112% as of Jan. 13.
I do not find the newfound enthusiasm surrounding Dogecoin to be a coincidence. During president-elect Donald Trump’s time on the campaign trail, he frequently spoke about the need to reassess the federal budget and identify areas where spending could be reduced. This notion was applauded by two Trump surrogates in particular, Tesla CEO Elon Musk and former Republican presidential nominee, Vivek Ramaswamy.
Leading up to the election, Musk frequently took to social media teasing the idea of creating a new federal agency called the Department of Government Efficiency (DOGE). Musk has previously been a supporter of Dogecoin, despite its meme-like nature and lack of utility in the real world.
Nevertheless, investors connected the dots between the creation of DOGE and Musk’s “support” of Dogecoin — thereby fueling a buying frenzy in the cryptocurrency.
… the price could climb higher in January, but…
While the current price of Dogecoin has dropped roughly 28% from its prior high of $0.47, the crypto still remains considerably elevated compared to prior levels. I think the sell-off in Dogecoin was caused by broader selling across both stocks and cryptocurrencies in general over the last few weeks.
However, Jan. 20 could be the day the Dogecoin begins to start rallying again.
The reason? Trump’s inauguration occurs on Jan. 20.
Once Trump assumes the position of U.S. president again, Washington is going to get a makeover underscored by a Republican-controlled Congress and new cabinet members advising Trump in the White House. As such, after Trump is sworn into office, the idea of Musk and Ramaswamy managing DOGE becomes more of a reality.
Image source: Getty Images.
… such a move doesn’t necessarily make Dogecoin a wise opportunity
The acronym for the Department of Government Efficiency (DOGE) matching the ticker symbol for Dogecoin is a coincidence — although it’s reasonable to believe Musk did this on purpose. Nevertheless, the cryptocurrency and the idea of creating an agency to reduce government spending are independent of one another.
Even if the price of Dogecoin starts to climb following Inauguration Day, the cryptocurrency remains a highly speculative investment opportunity. Moreover, any increases in Dogecoin in the near term will be rooted more in narratives as opposed to actual underlying fundamentals.
In other words, DOGE and Dogecoin do not have any real overlap at this time. For this reason, even if Musk and Ramaswamy create DOGE and manage to reduce the federal budget in a meaningful way, such actions have nothing to do with Dogecoin at all.
For these reasons, I would stay away from Dogecoin altogether. While Jan. 20 could very well be a day the cryptocurrency witnesses an outsize jolt, investors are best served sitting on the sidelines and allowing any narrative-driven volatility to play out.
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Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.
