2.1 Supply & Demand Dynamics

The value of Dogecoin (DOGE) is primarily determined by supply and demand:

• Fixed issuance mechanism: DOGE has a fixed annual issuance of 5 billion coins. The current annual inflation rate is approximately 3.7%, which gradually decreases as the total supply increases.
• Key to demand growth: If the market demand for DOGE grows by more than 3.7% annually, DOGE’s price will likely enter a long-term upward trend.

2.2 DOGE vs USD: Inflation Comparison

• Uncontrolled inflation of USD:
  • The Federal Reserve can print unlimited dollars. Between 2020 and 2023, M2 money supply surged, with inflation rates exceeding 8% at times.
  • The purchasing power of the dollar continues to decline, driving demand for inflation-hedging assets like BTC and gold.
• Predictable inflation of DOGE:
  • DOGE’s annual issuance is fixed at 5 billion coins, with a declining inflation rate. This makes it more transparent and stable compared to the USD.
  • If DOGE demand grows beyond 3.7%, it could enter a deflationary state, leading to sustained value growth.

2.3 DOGE vs BTC: A Similar Growth Path?

Bitcoin’s (BTC) value growth stems from:

• A fixed supply of 21 million coins, creating absolute deflation.
• Gradual adoption by institutions as a store of value.
• Strengthened market consensus, positioning it as "digital gold."

DOGE may follow a similar trajectory if it gains widespread adoption and utility.