Understanding Dogecoin’s Inflation and Its Economic Impact on Crypto Value

Cryptocurrency investors can sometimes overlook the supply inflation of a coin’s economic dynamics. Understanding how this economy affects cryptocurrencies is an important advantage to have in the crypto market.

Current Status of Dogecoin

To understand the supply inflation on behalf of Dogecoin (DOGE), public market data from leading indexes was collected. Interestingly, calculations were made on what price it could reach if Dogecoin hit its all-time highest market value, considering the economic effects of inflation as well.

Any crypto asset requires more demand to maintain its value and may face inflationary supply. Both supply and demand can be determining factors in whether a cryptocurrency’s price rises or falls.

Considering the CRYPTOCAP index, Dogecoin had reached its all-time highest market value of $98.473 billion on May 8, 2021. Meanwhile, according to data provided by 21milyon.com, the token was trading at a historic price of $0.7376 on the same day. Another calculation revealed that there was a circulating supply of approximately 133.504 billion DOGE at that time.

The Past and Future of Dogecoin

In examining the supply inflation of DOGE and its economic effects, as of the time of writing, Dogecoin had a circulating supply of 142.030 billion DOGE. This may indicate a supply inflation of 8.526 billion DOGE (6.38%) over two years, or about 3% annually.

This supply inflation and economic conditions may indicate what could happen to Doge’s price. If Doge reaches the highest demand with a market value of $98.473 billion, DOGE will trade at a lower price proportionally from its all-time high.

Considering the circulating supply as of November 29, Dogecoin could trade at $0.6933 per token, even when referring to its highest price movement. Interestingly, compared to the previous price of $0.7376 in 2021, this would result in a loss of $0.0443 (6%).

However, this may not necessarily worry investors. As of the time of writing, the current price of $0.0804 indicates a potential increase of 762%.

For such a price movement to occur, it is important to understand that Dogecoin requires the same demand as it had in 2021. Accordingly, there is no guarantee that this demand will be seen again.

Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry risk due to their high volatility and should conduct their transactions based on their own research.