The Practical Islamic Finance Podcast

Dogecoin to $1 soon?

March 29, 2024 Rakaan Kayali
The Practical Islamic Finance Podcast
Dogecoin to $1 soon?
Show Notes Transcript Chapter Markers

► If you enjoyed the episode, please leave us a good review!

► More from PIF:

Dogecoin to $1 soon?

In this episode, we explore:

  • Dogecoin's role within the PIF crypto portfolio.
  • Realistic price assessments based on fundamental analysis.
  • Advantages such as lower transaction fees and faster speeds compared to Bitcoin.
  • Potential utility expansion through integration with X.
  • The value of Dogecoin as a medium of exchange due to its inflationary supply and strong brand recognition.
  • Concerns regarding supply concentration.
  • Realistic peak price assessments based on market scenarios.
  • The importance of ignoring outlandish predictions and focusing on grounded assessments.
  • Comparison with other meme tokens, highlighting Dogecoin's proof-of-work model and established merits.



Our podcast is about helping people ethically build wealth. We cover a broad range of topics including stock and crypto investing, product reviews, and general financial well-being.


Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.

As-salamu alaykum everyone. Juma Mubarak. It is Friday. I hope everyone is doing well. It is the third Friday of Ramadan, and congratulations to everyone who stuck it through. You should really feel proud of yourself. This is not easy, you know, fasting, working, maintaining your focus, maintaining your productivity, and to the extent that you were able to do so, and don't be too hard on yourself, but to the extent you're able to do so, you should be very proud of yourself. All right, so I'm going to talk today about Dogecoin, which is my largest position in my PIF crypto portfolio, as PIF members know, and I'm going to talk about what are the possibilities here for price from a realistic perspective. You hear a lot of numbers thrown out. I've heard a $1, $2, $3. I've heard someone say $25. So what is actually realistic given the fundamentals? So at the end of this live, I'm going to tell you where I see realistically the range for coin at the peak of this crypto cycle. So without further ado, let's get started. And not financial advice, be sure to do your own due diligence before making any investing decisions. And before I forget, because I always forget to, well, often I do, do leave a like if you enjoy these lives. I'd really appreciate that. All right, so let's start with the merits of Dogecoin, just to refresh our memory here. So Dogecoin has, compared to Bitcoin, lower transaction fees, faster transaction speeds. So really with Bitcoin, it's tough to do, at least on layer one, it's tough to do any small transactions. Bitcoin is made for larger transactions. Dogecoin can do smaller transactions because it has lower fees. When you have fees of a certain amount, so for example, if your fees are $20 or $30 per transaction, then you basically rule out doing any transaction that's less than that amount. So Dogecoin solves that problem. It also has faster transaction speeds, has a strong community. I'm sure you've seen them with their memes online. It does have a strong case for a utility or potential utility, especially with the prospects of integration with X. So Elon Musk has mentioned many times that he was interested in integrating Dogecoin payments into X, the social media platform. And we've seen some progress made by X in terms of getting licenses for X payments across the United States. So this is something that's actually in progress. And the estimate is that mid this year, we'll have some form of X payments live. And to what extent Dogecoin is integrated into that, no one really knows, but it is an exciting prospect, certainly a potential catalyst for this crypto. And regarding people who consider just a meme coin with no utility, it does have utility. You can transfer value with it. You can make payments with it. If I want to pay someone across the ocean with it, I can do so in a matter of minutes, basically, with very low transaction fees. So this is real utility. It does have an inflationary supply, which I think makes it more likely to be used as a currency. Because with regards to Bitcoin, people like to just hoard Bitcoin because there's only going to be 21 million Bitcoin ever. And so people don't like to spend it. So they hoard it like people hoard gold using the same mentality. However, when you have an inflationary supply like Dogecoin has, which is a steady, predictable and decreasing inflationary supply, then people are more encouraged to actually use it and part with it in a transaction. And they also have a valuable brand. So the Shiba Inu dog, which actually all these more recent meme coins kind of took a page from, is really the original meme. And some estimates put the value of the brand of Dogecoin, just the familiarity of people with it, around $60 billion. I don't know how accurate that is or how you even measure that, but there is definitely some value to the brand of Dogecoin. If you ask someone on the street, they've probably heard of it. Now, let's talk about Dogecoin's main weakness, and its main weakness is in its concentration, the concentration of its supply. So if you look at the top wallet, the Dogecoin wallet, the top wallet holds 21% of all Dogecoin. So I'm assuming this is probably an exchange, perhaps Robinhood, but that's a lot. If you look at the top 15 wallets, you're looking at close to half of the total supply of all Dogecoin. And then if you're looking at, go to around 650 wallets, 80% of Dogecoin is in those 650 wallets. So it's very concentrated. And this is Dogecoin's weakness. When you compare this with Bitcoin, it is still very concentrated, Bitcoin is, but it's less concentrated than Doge. So if you look at the top three wallets for Bitcoin, they hold around 3% of total supply of Bitcoin. If you look at the top 2000 wallets in Bitcoin, they hold close to 40%. So both of them, both cryptocurrencies are too concentrated. However, I will say this, Bitcoin, I think will increase in concentration over time, whereas Dogecoin will likely decrease in concentration over time because of the dynamic that I mentioned, wherein with Bitcoin, people are more incentivized to hoard it. Whereas with Dogecoin, they aren't. And also Dogecoin doesn't have a set limit in terms of max supply. It does have a max new supply within a period of time, but it doesn't have a hard cap on supply over an infinite timescale like Bitcoin does. And therefore with the generation of new tokens, the supply should spread across more and more people. Now let's talk about price and predictions for it. So Dogecoin and Bitcoin are highly correlated. In fact, the correlation coefficient is a positive 0.94. Keep in mind the max number and the max score you can have there is one. So that would mean the two assets are moving in lockstep. So when you have this high correlation between two assets, you have the opportunity to do some pairs trading. So when one of them runs for a long time and the other one stays static, then if the correlation holds up, the one that was static is due for a big move. And in fact, this was the idea behind adding Dogecoin to the PIF crypto wallet is that I saw Bitcoin was moving, Dogecoin wasn't reciprocating, and the correlation between them historically was extremely high. So we ended up loading up on Dogecoin. And only recently, I mean, we held it for a year basically, and it wasn't doing anything more than a year. And only recently has it really popped. So in the last week only, it's up close to 50%. If I look at the last month, it's up 85% in the last, I'm sorry, in the last, yeah, it's up 43%. In the last month, it's up 67%. In the last three months, it's up 135%. So it's catching up to Bitcoin. However, if you look at where Dogecoin peaked in terms of Bitcoin, currently last cycle at least. So currently, there's 321,000 Doge per Bitcoin. In the last cycle, it peaked at 92,000 Doge per Bitcoin. So there's still, if the peak is going to be similar, then there's still a 3x from here, assuming no movement on the part of Bitcoin. And when you talk about $1 Dogecoin, given the market cap currently is around 31 billion, and the price is $0.21, then you're talking about a market cap of close to$150 billion. So is that even plausible? Well, let's look at some numbers. So if you look at the total, the top meme tokens by market capitalization, they're close to $68 billion or $69 billion. So this is according to CoinMarketCap. So $150 billion seems out of reach for a single meme token. However, if we were to consider some facts, we may change our opinion. So for example, with regards to the integration with X, X has 250 million daily active users. And let's say only a percentage of them, let's say 2% ended up using Dogecoin for a transaction of these daily active users. So that's 4 million, that's actually 5 million. So if we compare this with Solana, which currently has a market cap of close to$80 billion, Solana has 1.31 million daily active users. So you're talking about 4X the number of daily active users with a robust integration with X. Now, obviously, this is not the only metric to value a cryptocurrency, but I think it is instructive in terms of the amount of utility that a cryptocurrency is having, and price will follow utility. So the more daily active users, typically this means the more useful the cryptocurrency is being, and price should follow that. So the more useful something is, the more it's valued by the market, typically. So when you look at it from that perspective, perhaps the $1 Dogecoin seems more plausible. But also let's look at some other scenarios. So if we consider the total crypto market cap today, it's $2.61 trillion. Now, Dogecoin achieved a high of Dogecoin dominance, was 2.7%. That was the peak of Dogecoin in the last cycle. Now, currently, Dogecoin's share of the total market cap is 1.17%. So assuming a doubling. Now, if we look at where we are in the crypto market cycle, assuming history repeats, and I think it will rhyme. Assuming, so if you look at where we are in the crypto market cycle versus the peak, if we mimic our behavior in the last cycle, we will double in terms of total crypto market cap when we get to the peak. So that puts us at a $5 trillion total crypto market cap, roughly. And if we said, OK, Dogecoin maintains its dominance as it is right now. So the 1.17 figure, we maintain that percentage of the total crypto market cap. Then that puts us at a price of$0.42. Now, on the other hand, if we assumed no growth and the total market cap, so we were just stuck here at$2.61 trillion. And we reached the same peak dominance of the last cycle. So we reached that 2.7%. Then the Dogecoin price would be $0.49. So let's assume crypto doesn't grow at all this market, this cycle. From where it is right now, we've peaked out at $2.61. If we achieved the 2.7% peak of Dogecoin dominance, we'd be at $0.49. And then if you look at the third scenario, so assume, you know, both things go our way. So we have the total crypto market cap reaching the same levels that reached last cycle on a relative basis. So it doubles from here, reaches $5 trillion total crypto market cap at the peak. And we have the same peak for Dogecoin. So we have 2.7% of that total crypto market cap that gives us a Dogecoin price of $0.96. So when you look at the numbers this way, it does seem like $1 Dogecoin is not too far fetched. Now, given this analysis, I think you can comfortably ignore people who are saying, you know,$25 or something like that, something outrageous. It's, I think, a much better idea to actually run the numbers and see what makes sense. So I actually think that, and now you may be wondering, well, what does Dogecoin differ from all of these other meme tokens that are popping up, you know, by the hour? The fundamental difference, I think, is that it is proof of work as opposed, that means you have to do compute, you have to spend energy in order to generate Dogecoin. Whereas with these tokens, they're just created out of thin air with no work done, which makes it, I think, first of all, more concentrated. Second of all, my confidence level with the security of the system is much lower. And I think there's all of those, which I won't repeat, but all of the things that we said were meritful about Dogecoin at the start of this live. So I think that Dogecoin will actually perform quite well in this cycle. This is why I have it in our crypto portfolio. And if you'd like to follow that portfolio to become a PIF member, we'd love to have you in our community of Halal-conscious investors. With that, if there are any questions, is it Halal to invest in Hive? How do you rate it? Hive, SubhanAllah, you're asking because we were just going over this myself and an analyst here at PIF. So Hive actually makes it into the comfortable, so we're comfortable investing in Hive as a Bitcoin miner from a Halal perspective. However, that being said, it didn't rank that high. So we were judging the Bitcoin miners by a number of different criteria and didn't score high compared to other Bitcoin miners. So I hope you found that beneficial. Until next time, take care of yourself. Leave a like if you haven't already. Assalamualaikum and peace be upon you all.

Dogecoin's role within the PIF crypto portfolio
Realistic price assessments based on fundamental analysis
Advantages such as lower transaction fees and faster speeds compared to Bitcoin
Potential utility expansion through integration with X
The value of Dogecoin as a medium of exchange due to its inflationary supply and strong brand recognition
Concerns regarding supply concentration
Realistic peak price assessments based on market scenarios
The importance of ignoring outlandish predictions and focusing on grounded assessments
Comparison with other meme tokens, highlighting Dogecoin's proof-of-work model and established merits