Prediction: Dogecoin Will Plunge to $0.05 in 2027

Dogecoin (DOGE -0.53%) recently dipped below $0.07 per coin, something it hadn't done since 2023. It's attempting to recover some ground and reclaimed the $0.10 level last week, but it's still down 87% from its 2021 record high of $0.73, so it has a long way to go.

Dogecoin was created in 2013 by two friends, Billy Markus and Jackson Palmer. They felt the cryptocurrency industry was taking itself too seriously at the time because many enthusiastic investors believed Bitcoin was about to transform the entire financial system. Markus and Palmer launched their digital token as a joke to lighten the mood, so it was never meant to have a specific use.

That means it lacks a sustainable source of demand to prop up its value. But a different problem almost guarantees further downside from here, so here's why I predict the price of a single coin will plunge to $0.05 in 2027.

Dogecoin is failing the adoption test

Many cryptocurrencies were designed with a purpose, so they have a steady stream of buyers to support their value. Ether, the native coin of the Ethereum blockchain, and Solana are used as payment mechanisms to cover computing costs when running decentralized software applications built on their respective platforms. XRP, on the other hand, is used as a bridge currency in the Ripple Payments network.

Bitcoin doesn't have a direct use case, but many investors consider it to be a legitimate store of value because of its decentralized nature and its capped supply, which creates the perception of scarcity. It is often likened to a digital version of gold.

Although Dogecoin can technically be used to make payments, a mere 2,346 businesses worldwide are willing to accept it (according to crypto directory Cryptwerk), and most of them are obscure providers of crypto and internet services. If consumers can't spend their crypto for everyday transactions, they have no reason to hold it.

It isn't linked to any decentralized software platforms, either, and it certainly isn't a good store of value considering it hasn't set a new high in more than five years, ruling out any potential demand from the investment community.

But if those issues aren't enough to explain Dogecoin's steady decline since its 2021 peak, I have even more bad news.

Dogecoin's supply problem almost guarantees more downside

Dogecoins and bitcoins are issued through a mechanism called mining. It involves people using computers to solve complex mathematical problems for the right to validate transactions on the blockchain, a process that is crucial to maintaining a secure system of record. Validators are rewarded with payment in Dogecoin or Bitcoin, depending which cryptocurrency they mine, to encourage their continued participation.

However, Bitcoin's total supply is capped at 21 million coins, so there won't be any left to mine by the time the year 2140 rolls around. Dogecoin's supply, on the other hand, has no cap. Although a maximum of 5 billion coins can be mined each year, there is no end date, so the circulating supply will grow until the end of time.

Personally, I've never come across an investment-grade asset with an unlimited supply that increased in value over the long term. Even most fiat currencies lose purchasing power over time precisely because money supply is constantly expanding.

Why I think Dogecoin will plunge to $0.05 in 2027

Dogecoin has a circulating supply of 156.1 billion coins as I write this (Sept. 26), so adding 5 billion more to the pool in 2027 would result in dilution of about 3%. Theoretically, the price per coin should decline by an equal amount to offset that dilution. We see this all the time in the stock market: When a company issues new shares, the price of each existing share often declines by a proportionate amount to compensate.

However, companies try to recover any lost value to shareholders by increasing their revenue and earnings. Unfortunately, as I established earlier, Dogecoin has no legitimate way to create real value.

That means the recent price per coin of $0.10 could fall to $0.097 by the end of 2027, just to account for dilution. However, I think the steady deterioration in sentiment will lead to even more downside. Considering it recently traded as low as $0.068, I don't think $0.05 is an unrealistic target.

But even if Dogecoin doesn't sink to that level in 2027, it's almost inevitable over the long term. If 5 billion new coins enter circulation each year, supply will double during the next 31 years, so the current price per coin of $0.10 is likely to halve to $0.05.