Crypto Market Faces Decline as S&P 500 and Nasdaq Struggle

The Stock market has had a shaky beginning in 2025. As of March 4, the S&P 500 and Nasdaq Composite are down by 1.5% and 5.2%, respectively.

During times of poor stock market performance, investors often redirect funds into alternative assets like commodities or cryptocurrency. However, the crypto markets have not fared well this year either. The top two cryptocurrencies, Bitcoin and Ethereum, have declined by 7% and 36%, respectively, with others following similar trends.

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Among the cryptocurrencies affected is Dogecoin (CRYPTO: DOGE). After a remarkable gain of 251% in 2024, its price has dipped by 36% thus far this year.

Understanding the Rise of Dogecoin

Despite significant gains last year, Dogecoin’s price movements reveal a more complex narrative. As shown in the chart below, most of Dogecoin’s increase in 2024 occurred in the final two months of the year.

Dogecoin Price data by YCharts.

The surge in Dogecoin’s price can be traced back to the 2024 presidential election. During the campaign, Tesla CEO Elon Musk became a significant supporter and donor of then-candidate Donald Trump. Musk and Trump shared a concern over a bloated federal budget, leading Musk to suggest a team tasked with identifying waste. This initiative was dubbed the Department of Government Efficiency (DOGE).

Image Source: Getty Images.

Assessing the Current Buying Opportunity for Dogecoin

A closer look at Dogecoin’s price chart reveals that its value began dropping toward the end of 2024, having fallen by 53% since December 1.

Dogecoin Price data by YCharts.

Elon Musk’s playful support of Dogecoin, often framed as humor, likely influenced the naming of the efficiency initiative. However, DOGE serves merely as a catchy acronym without any genuine connection to the cryptocurrency itself.

Further complicating the picture, Dogecoin still functions primarily as a meme coin. It lacks substantial utility in both real and digital markets. The sell-off that commenced in December was, in my opinion, the precursor to more significant declines, as investors began to recognize that the price rise was not underpinned by any solid fundamentals.

The continued fall of Dogecoin seems inevitable, likely far from reaching its lowest point. Given its highly speculative nature and an unstable crypto market, prudent investors should consider steering clear of Dogecoin. Therefore, I do not recommend purchasing Dogecoin at this time, as I anticipate further price declines.

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Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.