Dogecoin (DOGE) Might Be a Strategically Sound Addition to Investment Portfolios: 21Shares

Crypto investment firm 21Shares has challenged the common perception of Dogecoin (DOGE) as a ‘memecoin’ in a new report. According to the firm’s analysis, a small 1% allocation to the cryptocurrency could be a strategic addition to investment portfolios.

In a recent analysis by 21Shares, they explored the impact of adding a 1% Dogecoin allocation to a "Bitcoin-enhanced growth portfolio." This portfolio was defined as a traditional 60/40 portfolio (60% stocks, 40% bonds) with an additional 3% Bitcoin allocation.

The goal was to examine how Dogecoin and Bitcoin might complement each other in a portfolio that most cryptocurrency investors would be familiar with.

Their findings indicate that even a minimal addition of 1% to Dogecoin resulted in improvements in both returns and risk-adjusted performance.

According to their data, every portfolio approach including Dogecoin delivered stronger returns than the benchmark. While the benchmark portfolio displayed annual returns of 7.25%, the DOGE-enhanced portfolios achieved returns as high as 8.95%.

Furthermore, they observed improvements in Sharpe ratios in almost all test cases, denoting better risk-adjusted returns. The analysis also highlighted a slight increase in volatility with the inclusion of Dogecoin.

However, they noted that drawdowns remained "largely contained." Even portfolios with no rebalancing saw max drawdowns only deepen by a few percentage points, which 21Shares interprets as evidence that “even a 1% DOGE allocation adds meaningful punch without destabilizing the broader portfolio.”

DOGE price prediction

21Shares also shared three potential price scenarios for Dogecoin by 2025. This ranges from bearish to bullish projections. In their bull case scenario, they suggest the Dogecoin price could reach approximately $1.42. This is a 7.67x multiple from current prices.

This optimistic projection is based on analyzing Dogecoin’s growth pattern from previous market cycles. The analysis notes that DOGE’s price moved from a bottom of $0.007 before the last bull run to $0.0585 at the bottom of the current cycle. This is a compound annual growth rate (CAGR) of 189%. Applying similar growth metrics forward leads to the $1.42 price target.

In their neutral case scenario, 21Shares forecasts a $1.00 price target. This is approximately a 5.5x increase from current levels. This places the overall market capitalization of the cryptocurrency at $5 trillion in this cycle with Dogecoin adding a 3% market share. This would translate into a $150 billion market cap for DOGE.

The bear case is more conservative with an estimated target price of $0.38. This case employs the premise that Dogecoin cannot print a new all-time high in the current market cycle for the very first time in its existence. It may still provide positive returns based on an estimated 10% CAGR from its peak of $0.73 in 2021.