Dogecoin has soared 350% this year. Will it be a better buy than Bitcoin in 2025?

The total market capitalization of all existing cryptocurrencies recently reached a new record of $3.5 trillion. It is therefore safe to say that the sector is having a spectacular year.

About $1.9 trillion of this market capitalization is attributable to Bitcoin (BTC 3.01%) alone. It is the undisputed leader in the cryptocurrency sector, and its value has more than doubled this year. However, some of the most speculative – and risky – cryptocurrencies have performed even better in 2024.

Dogecoin (DOGE 3.66%) is a novelty token created in 2013 as a joke. Nonetheless, it has generated a whopping 350% return this year, making investors laugh all the way to the bank. President-elect Donald Trump and his mega-supporter Elon Musk are responsible for much of this rally, and I’ll explain why in a moment.

Momentum is on Dogecoin’s side heading into the new year, so will it be a better buy than Bitcoin in 2025?

Image source: Getty Images.

The Trump-Musk effect

Muskthe influence of Dogecoin dates back to 2021. Throughout this year, he has called Dogecoin his favorite cryptocurrency, regularly promoted it on social media, and even appeared in a Dogecoin-themed comedy skit on Saturday Night Live (SNL) on May 8 of the same year.

Dogecoin started 2021 priced at $0.0046 and over the next five months, it soared 15,769% to an all-time high of $0.73. This peak was reached the night of Musk’s SNL appearance, but once investors realized he had no real plan to back up his verbal support, Dogecoin plunged. By mid-2022, it had lost 92% of its value.

The token stabilized in 2023 and 2024, and it was even trading near its 52-week low as recently as September. However, when Trump won the election for the presidency on November 5, Dogecoin took off like a rocket (along with most other cryptocurrencies). Speculators believe the Trump administration will approach the crypto industry with a light regulatory touch, paving the way for more use cases to support its value.

Musk was one of the biggest supporters of Trump’s campaign. As a result, Trump recently appointed Musk to head a new entity called the Department of Government Effectiveness, or DOGE for short. This is a clear reference to Musk’s favorite cryptocurrencywhich added even more fuel to Dogecoin’s rally – although there is no suggestion that the token will play a role in the new department.

Dogecoin lacks fundamentals, while Bitcoin has real upside catalysts

Despite Dogecoin’s significant gain in 2024, it is still trading below its 2021 all-time high. Bitcoin, on the other hand, continues to set new records and approaches a milestone price of $100,000 per coin .

A lack of fundamentals can be blamed for Dogecoin’s inability to fully recover from its 2022 slump, as Bitcoin There appears to be a growing list of positive catalysts. To be clear, neither has succeeded as a currency: only 8,875 merchants worldwide accept Bitcoin as payment for goods and services (according to Cryptwerk), and only 2,515 are willing to accept the Dogecoin. However, Bitcoin is proving to be a true store of value, perhaps like a digital version of gold.

Earlier this year, the Securities and Exchange Commission (SEC) approved several Bitcoin Exchange Traded Funds (ETF), which offers financial advisors and institutional investors a safer, more regulated way to own cryptocurrency. This opens the door to much wider adoption, which is a tailwind that Dogecoin may never unlock.

Many top Wall Street analysts now have bullish price targets for Bitcoin. Cathie BoisArk Investment Management’s Ark Investment Management believes this could reach nearly $1.5 million per coin based on eight potential use cases. A few of them include:

• Businesses and governments could potentially hold Bitcoin alongside their cash reserves to protect against economic forces such as inflation.
• Bitcoin could become a staple of the institutional investment industry’s asset base thanks to the wide availability of ETFs.
• As I mentioned earlier, Bitcoin could become a digital version of gold.

2021 was a lesson in speculative frenzy

Dogecoin’s rally this year looks a lot like its 2021 rally. The token doesn’t have any new use cases to support its recent increase in value, so I think investors should be on alert for a new one. fall, similar to what happened in 2022.

On the other hand, the number of reasons to own Bitcoin appears to be increasing. If it is truly accepted by most investors as digital gold, this could pave the way for a substantial upside in 2025 and beyond.

The current value of all mined gold reserves currently stand at almost $18 trillion, so for Bitcoin market capitalization to match this, the price per coin would have to rise about 850% from where it is trading at the time of this writing.

I’m not saying this will happen, because there is a speculative element in all cryptocurrencies, including Bitcoin. Investors simply buy them in the hope of a price rise at some point in the future. But it’s a potential target that a growing number of investors could aim for, so I predict Bitcoin will be a much better buy than Dogecoin in 2025.