Both Dogecoin (CRYPTO: DOGE) and the Official Trump meme coin, with the ticker TRUMP, are among the most well-known meme plays out there at the moment. But, contrary to what you may have heard, not all meme coins are the same in terms of their balance of risk to reward.
And, in this particular matchup, there’s a lot to discuss. So let’s dive in.
Dogecoin is the meme coin that started its entire asset class within cryptocurrency, and many years later it’s still alive and kicking, with an impressively large market cap of around $47 billion.
In terms of the investment thesis for buying Dogecoin, this chart does a better job of explaining it than words alone:
Dogecoin Price data by YCharts.
As you can see, on average Dogecoin shares a high degree of correlation with the action of Bitcoin. That implies if Bitcoin retains its habit of surging and ebbing in four-year cycles, in keeping with the rough timing of the halving of its mining reward, there’s always going to be extra liquidity to flow from Bitcoin to Dogecoin.
Put more simply, if Bitcoin continues to make investors richer in specific periods of time, some of the additional money they make ends up getting spent on Dogecoin on average. That makes sense because investors can probably find a higher return during a speculative boom in Dogecoin than in Bitcoin, as it tends to be more volatile.
Then there’s the other element of the Dogecoin thesis. As a meme, Dogecoin has continued to garner a significant amount of attention every few years for more than a decade now. Investors keep coming back in anticipation of the next run-up, and the meme itself is broadly recognizable and easy to riff on.
Furthermore, the coin may one day be included in exchange-traded funds (ETFs) that give it more exposure to liquidity from the traditional financial markets. But those ETFs aren’t approved yet.
Does that mean you should buy it? No, at least not until you’ve diversified your portfolio with safer investments, and not unless you’re willing to lose all of your money.
Hot off its launch on Jan. 17, Trump’s meme coin has a market cap of roughly $5 billion today, making it one of the largest meme coins that exists.
Though it doesn’t have the same vintage as Dogecoin, it does have one very obviously powerful factor driving its price: It bears the name and endorsement of the president of the U.S., and it’s the only cryptocurrency with that distinction. During what’s expected to be a pro-cryptocurrency administration, having the explicit support of the president means that it is unlikely for Trump’s coin to go to zero. It could also potentially catch a major tailwind if the president’s actions cause people to want to buy his coin. And that dynamic could easily last for the entire four-year term.
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