I can’t believe I’m writing this, but 2024 is almost over. Over the past 11 months, capital markets have been impacted by everything from artificial intelligence (AI) to a presidential election.

As always, the market put in another robust performance – with the S&P 500 (^GSPC 0.61%) And Nasdaq Composite (^IXIC 1.30%) each with a total return of almost 28% (as of this writing).

But behind the scenes, another asset class hasn’t performed too badly either. I’m talking about cryptocurrency. While Bitcoin While he flirted with the prospect of reaching $100,000 per coin, another token has come into the spotlight.

Dogecoin (DOGE 4.10%) will rise by more than 350% in 2024, and there is a real chance it will continue to rise rapidly. While it’s tempting to buy Dogecoin right now, I’ll outline one of the key catalysts for its rise and why investors might be better off leaving it alone.

What is driving up the price of Dogecoin?

On September 11th, I published an article predicting that the price of Dogecoin was about to go parabolic. Since the day my article was published, Dogecoin is up 330%.

I don’t say this to brag – it’s not like I have a crystal ball and can predict the future. It was clear to me that the price of Dogecoin would soon break out.

Why? Because I thought there was a very good chance that then-candidate Donald Trump would emerge as the winner of the presidential election. It turned out that this assumption was also correct.

Although President-elect Trump is more of a vocal supporter of Bitcoin, one of his biggest campaign donors and surrogates has long been associated with Dogecoin. Of course I’m talking about it Tesla CEO Elon Musk.

While Musk has been more of a tongue-in-cheek supporter of Dogecoin, the entrepreneur made a pretty obvious allusion to the cryptocurrency in the run-up to the election. Musk used social media to promote the creation of a new government agency if Trump won. The name of the agency was Department of Government Efficiency (DOGE).

My reasoning was that if Trump won, he would then make an announcement that Musk would join his government and create DOGE. Therefore, I assumed that the price of Dogecoin would increase based on this news. All of that has happened so far – but that doesn’t mean Dogecoin is a viable investment opportunity.

Image source: Getty Images.

Why investors should avoid Dogecoin

The main reason investors should avoid Dogecoin is because it is a meme coin. As I pointed out, the main reason for Dogecoin’s recent price increase is due to rumors of a new government agency led by Musk and funny memes that have fueled this narrative online. In other words: Musk’s DOGE has nothing to do with Dogecoin itself. Ultimately, the price of Dogecoin is completely independent of anything tangible.

Where will Dogecoin be in a year?

In the short term, it wouldn’t surprise me if the price of Dogecoin continued to rise. Given the positive sentiment surrounding DOGE, President-elect Trump’s inauguration getting closer, and the possibility of a Santa Claus rally in late December, I think there’s a good chance that stocks and cryptocurrencies will see another rally before the end of the year.

But as always, reality will eventually set in. The idea of ​​DOGE is interesting – namely, reducing excess costs in the federal budget in order to reduce the deficit. However, I think Musk and his team will find that such an effort is much easier said than done. After all, the new Trump administration is not the first to have such an idea.

While I’m not saying that DOGE is doomed, I do expect that reducing the federal deficit will take much longer than most people probably expect. So it wouldn’t surprise me if some of the euphoria surrounding Musk’s ambitions fades – and with it the price of Dogecoin.

In my opinion, Dogecoin is an unusually risky investment opportunity, embedded in the already speculative nature of cryptocurrency. I would forego investing in Dogecoin and allow the internet-driven hype to unfold. By this time next year, I wouldn’t be surprised if the price of Dogecoin had declined significantly.