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The cryptocurrency market has long been a favorite of aggressive investors (perhaps more accurately described as speculators) because of its volatility . At their best, these digital assets can trounce traditional stock market indexes like the S&P 500 or Nasdaq Composite .

With its price up by about 340% year to date at the time of writing, Dogecoin (CRYPTO: DOGE) is an excellent example of this explosive, millionaire-making potential. That said, hype can sustain a rally for only so long before reality kicks in. Let's discuss whether Dogecoin's fundamentals can sustain continued gains over the long term.

Why Dogecoin?

Introduced in 2013, Dogecoin is likely the first of the meme coins , a class of cryptocurrency based on online jokes. Meme coins typically aren't designed for real-world utility or to improve upon the shortcomings of other blockchain platforms. That said, their market caps tend to be smaller than those of mainstream cryptocurrencies, making them volatile and capable of explosive returns when industry sentiment is bullish.

Dogecoin was a relatively poor performer until 2021, when it rocketed into the mainstream after supportive tweets from Tesla Chief Executive Officer Elon Musk. Low interest rates and government stimulus after the COVID-19 pandemic likely contributed to the asset's bull run.

Despite starting as a joke, Dogecoin has shown impressive performance. As the chart below shows, the coin has risen 103,400% since its inception, while Bitcoin has grown 16,470% during the same period. But while Dogecoin has minted its fair share of millionaires, it has also destroyed a lot of wealth in the process. Prices are still down about 45% from their all-time high of $0.7376, reached in May 2021.

Dogecoin Price data by YCharts

What is behind the latest rally?

While investing in Dogecoin can be considered a higher-risk, higher-reward way to play the cryptocurrency industry, potential investors should consider its fundamentals.

Like Dogecoin's previous bull run in 2021, the asset's latest move is linked to Elon Musk, who is once again supporting the coin on X (formerly Twitter). The outspoken ally of the Trump administration will also be involved in a watchdog federal agency called the Department of Government Efficiency (DOGE). The organization's name's similarity to Dogecoin's ticker symbol is likely no accident.

On a more substantive level, investors may expect Musk's influence in the new administration to lead to a more favorable regulatory climate.

According to Time , Trump will replace the current Securities and Exchange Commission (SEC) chairman, Gary Gensler, who said he will resign when Donald Trump takes office as president. Gensler is credited (or blamed) for bringing several lawsuits against cryptocurrency platforms for alleged violations of securities laws. Targets included crypto exchange Coinbase Global , which the SEC sued in June for allegedly acting as an unregistered broker and exchange.

During the coming years, the government will help shape how the public interacts with digital assets. And many believe that Trump's proposed SEC head, Paul Atkins, will take a less heavy-handed approach.

Is Dogecoin a buy?

In the near term , the future of the cryptocurrency industry looks bright . A more favorable regulatory climate could improve access to this fast-growing asset class and make it more palatable to large institutional investors who can be expected to buy and hold for the long term.

That said, Dogecoin's fundamentals could be a challenge.

The platform is designed to create 5 billion new coins per year (147 billion units are now in circulation). This built-in supply growth could help Dogecoin function better as a medium of exchange by improving liquidity , but it makes Dogecoin less attractive to hold as a long-term investment. While this crypto has made plenty of millionaires, the risks of buying it at the top of this current rally seem to outweigh the potential rewards.

Before you buy stock in Dogecoin, consider this: