Case Study of Dogecoin: How to Value Memecoin

The performance and endurance of Dogecoin across multiple market cycles show that it is not just "one of the memes". Over the past decade, DOGE has even outperformed Bitcoin, delivering returns of more than 133,000%, almost 1,000 times BTC's gain over the same period. Despite the deep decline in the bear market, Dogecoin has shown remarkable structural resilience After each major price increase, the price continuously forms higher lows, a long-term bullish pattern and accumulated strength.

Historically, Dogecoin closely reflects the movements of Bitcoin, often peaking a few weeks later. While 2024 sees Bitcoin dominating the headlines following the groundbreaking ETF approval, DOGE continues to follow its trajectory, although it has yet to experience the typical delayed breakthrough. As macro instability continues to ease and momentum returns to the market, retail investor participation is likely to accelerate, creating conditions that traditionally help Dogecoin thrive. At the same time, the regulatory clarity surrounding Dogecoin has improved. The SEC recently confirmed that most memecoins are not considered securities, comparing them to collectibles. Additionally, they clarified that proof-of-work rewards, such as rewards earned from mining DOGE, also fall outside that scope. These developments further legitimize the role of Dogecoin in the ecosystem, potentially laying the groundwork for its next advance, especially as it currently maintains a support level around $0.17, nearly three times the level before the price increase that led to a new all-time high in the previous cycle. In addition to long-term performance, Dogecoin stands out as an asymmetric asset, providing investors with a rare source of uncorrelated returns across both traditional and cryptocurrency portfolios. With an average correlation of only 15% with major assets, the price action of DOGE remains largely detached from broader macroeconomic trends, reinforcing its value as a true diversification tool. Dogecoin demonstrates significant independence in the cryptocurrency market, with a correlation of only 31% with Bitcoin and 37% with Ethereum. This divergence stems from unique capital flow dynamics, where higher beta assets like DOGE tend to appreciate after blue-chip cryptocurrencies reach key milestones. As Bitcoin gradually evolves into a digital store of value and Ethereum drives decentralized infrastructure, Dogecoin remains primarily a cultural asset, thriving on storytelling momentum and crowd psychology, offering explosive growth potential as risk appetite increases. For investors looking for profits that do not reflect the behavior of core holdings, Dogecoin is an intriguing case. Its ability to detach from market trends while capitalizing on multiple speculative price spikes makes it a strong, albeit unconventional, addition to a portfolio with surprising potential.