Tesla-Induced Boost Is Now Nearly Erased: What's Next For Dogecoin

Dogecoin received a nice boost on Friday when $Tesla(TSLA.US)$ began accepting the meme currency as a payment method for some of its merchandise. The gains proved fleeting as the crypto could not build on the momentum.

What Happened: Dogecoin is seen underperforming Bitcoin and most altcoins on Sunday, and was last seen trading down over 5%.

Dogecoin ended 2021 at $0.170496, up about 3,541% for the year, but was way off its all-time high of $0.737567 hit on May 8, 2021. Since then, the meme currency had a not-so-enterprising second-half of the year amid weakness across the cryptoverse.

The new year did not bring any respite, as Doge continued to flatline, trading in the range of $0.139840-$0.175989 ahead of Friday. The Tesla news spurred the currency to break above the trading range and top the $0.20 mark. After hitting a high of $0.203232 Friday, Doge has dropped back down.

It ended Saturday's session at $0.185103 and has pulled back further on Sunday.

What's Next For Doge: Going forward, Doge's trajectory largely depends on more merchants beginning to accept the currency as a payment option. Theater chain $AMC Entertainment(AMC.US)$ is likely to begin accepting Doge for ticketing in early 2022. Wider mainstream adoption could offer support for the currency.

As had been the case for most of last year, it appears Tesla CEO Elon Musk can singularly prop up the currency with his tweets. Musk said in a Times interview in December he thinks Doge has better transactional value than Bitcoin.

The Doge community has been touting a few catalysts that can prop up the currency. These include the launch of the Doge-funded Doge-1 satellite by Musk's SpaceX; the release of a digital wallet by $Robinhood(HOOD.US)$ which will allow deposit and withdrawal of cryptocurrencies, including Bitcoin and Doge; Tesla accepting Doge for vehicle purchases and the Doge-Ethereum bridge, which is expected to be built in 2022 and boost Doge adoption.