Dogecoin Won’t Bounce Back as Long as it’s No Bark, No Bite

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Lacking in both hype and substance, DOGE could continue to lag behind its serious and not-so-serious peers


Following a correction last month, cryptocurrencies in general have been bouncing back strongly. But what about dogecoin forecast (DOGE-USD)? It is rising in value, although not to the amount seen with established coins such as Bitcoin (BTC-USD) and Ethereum (ETH-USD), as well as other "pupcoins" such as Shiba Inu (SHIB-USD).


BTC and ETH were up 22.7 percent and 25.4 percent, respectively, in the seven days ended Feb. 10. Shiba Inu was up more than 64.2 percent as a result of the buzz surrounding its metaverse plans. On the other hand, what about Doge? While a 17.2 percent increase in a matter of days is nothing to sneeze at, there may be reason to be concerned about why this "old dog" is trailing the serious and not-so-serious competitors.


Specifically, the original "memecoin" is severely deficient in either its bark (hype surrounding it) or its bite (fundamentals). The coin's fan base could reach in the millions. On social media, it may still be more popular than Shiba.


However, this isn't persuading the crypto trading public to send it back above 20 cents per coin (it's now around 16 cents per coin). On a journey back to previous highs, much less. Add to that its sluggish pace in upgrading its capabilities to the level of "Ethereum killer" cryptocurrencies, and it's difficult to make a case for it.


dogecoin Shows Lots of Talk, Little Action


In previous coverage of DOGE-USD, I outlined a key issue with this cryptocurrency that began as a joke. That is its lack of utility. Despite all of Elon Musk's hype about driving it as an advanced crypto last year, his words and Tweets haven't resulted in much action so far.


Sure, dogecoin has made some strides toward becoming a more useful coin. Its developers have launched a variety of projects that may boost the number of merchants who accept it as payment as well as developer activity on its blockchain. Nonetheless, it is nowhere close joining the ranks of Cardano (ADA-USD), Solana (SOL-USD), or any of the other prominent "Ethereum killers."


Doge no longer needs to become smart contract-enabled or extensively used in decentralized finance (DeFi) to see its coin price rise again. As previously stated, Shiba Inu has recently seen a significant increase as a result of its entry into the metaverse universe. Shiba's coin-burning intentions, as my InvestorPlace colleague Josh Enomoto recently explained, have also contributed to its rise.


While both developments have more hype than reality, Shiba lacks bite but has a loud bark. Unfortunately, DOGE-USD is currently deficient in both.


What About That Big Fanbase?


To be sure, some readers may find it absurd that dogecoin lacks bark, according to the coin's still-massive audience. It's the second most-talked-about cryptocurrency on social media, right after Bitcoin. Its official Twitter (NASDAQ:TWTR) page has 3 million followers, outnumbering Shiba's 2.7 million.


However, the fact that a large number of DOGE-USD "HODLers" remain in its camp does not indicate that it is poised for another significant price increase. This fandom, similar to what we've seen with meme stocks like GameStop (NYSE:GME), may be sufficient to keep it stable.


However, without either significant levels of hype (as witnessed with Shiba) or news of increased functionality, fresh speculators will enter the market. It will be difficult to return to higher prices without new speculators. Not only that, but I wouldn't consider its current fanbase to be "sticky."


If it continues to move the needle, its more lukewarm supporters will most certainly abandon ship. This could cause it to progressively fall to cheaper prices over time. On top of that, there is a risk to all "memecoins" that are still on the table.


Crypto may be on the mend after a sharp dip last month in response to the Federal Reserve's rate hikes. Today, it is widely assumed that the Fed's interest rate hikes are "priced in." As a result, it is safe to return to "risk-on" bets.


But what if inflation, the rationale for the rate hikes, persists? The Fed may need to adopt more dramatic measures. A higher-than-expected rise in interest rates might trigger another "risk-off" reversal. One that makes the December/January shift to "risk-off" appear mild in comparison.


Big Move Needs Bigger Action


Unfortunately, the issues that are causing Doge to lag behind its counterparts are mainly under the control of its developers. That is, if they revealed significant enhancements to its usefulness, it would almost certainly be enough to trigger a resurgence.


If it chose to follow Shiba's lead and chase the metaverse trend? The same thing might happen.


But don't anticipate dogecoin to make a huge leap until its developers take action.

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