It seems hard to believe, but Dogecoin (CRYPTO: DOGE) — a meme coin that launched as a viral internet joke back in 2013 — still ranks among the top 10 cryptocurrencies in the world. It currently has a massive $14 billion valuation.
But does Dogecoin have any legitimate reason to be included in your long-term portfolio, other than its size and long-term staying power?
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Diversification benefits
Meme coins continue to account for approximately 1% of the value of the entire crypto market. So, purely on diversification grounds alone, it could be argued that investors should have exposure to at least a tiny sliver of the meme coin market. Dogecoin, as the biggest meme coin by market cap, would be the obvious pick.
Case in point: Market indexes tracking the broader crypto market typically include the top meme coins. For example, the Coinbase 50 Index includes Dogecoin, where it has a 1.65% weighting. You simply can’t ignore that $14 billion valuation.
Moreover, in response to investor demand, crypto investment firms have already launched spot Dogecoin ETFs. This has helped to legitimize meme coins as an investable asset class.
Upside potential
But let’s face it: Diversification isn’t the real reason most people include Dogecoin in their portfolios. Most investors are focused solely on upside potential, and Dogecoin has clearly demonstrated its ability to soar in value over short periods.
Just look at a five-year chart for Dogecoin, and you’ll see a few massive price spikes. While it’s trading for just $0.08 these days, that’s still up a whopping 15,962% since launch. In May 2021, Dogecoin soared to $0.74. If Dogecoin can get back to that level, it has roughly 9x upside.
Dogecoin as a utility coin?
Thus far, the primary use case for Dogecoin has been as an online payment method. Billionaire Mark Cuban, for example, accepts Dogecoin for ticket sales and merchandise related to his NBA team, the Dallas Mavericks. And billionaire Elon Musk — a longtime proponent of the meme coin — accepts Dogecoin for some Tesla merchandise.
But what if Dogecoin ever finds another use case and transitions from a pure meme coin to a much more utility-oriented coin? That’s when it might finally deserve a closer look by long-term investors. Instead of being based on hype and buzz, the value of Dogecoin would be based on something more tangible.
