- - The Downward Spiral Continues: Why Dogecoin Dropped Another 5% Today

Chris MacDonald, The Motley FoolDecember 31, 2025 at 10:47 PM

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Key Points -

Most meme tokens are set to end the year markedly lower.

Investors appear to be repositioning their portfolios in a more defensive fashion heading into the New Year.

Here's what to make of Dogecoin's price action today and in 2025 overall, and dive into where this token could be headed from here.

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In an otherwise flat market for digital assets for most of the day, cryptocurrencies have been one of the least exciting places for traders and speculators to put capital to work as the year comes to a close. That said, the world's largest meme token is ending the year with a bang, but not necessarily in a good way. As of 3:30 p.m. ET, Dogecoin (CRYPTO: DOGE) is down 5% over the past 24 hours, and is on pace to end the year nearly 63% lower than where it kicked off 2025.

Let's dive into what's driving this end-of-year selling and whether we may see a reversal in the year to come.

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What's driving Dogecoin lower to end the year?

Young folks looking at memes on their phones.

Source: Getty Images.

I think most of today's price action can probably be attributed to investors rejigging their portfolios heading into the New Year. Those looking to ramp down risk-on exposure to specific assets that tend to surge during hyper-bull markets (with significant upside momentum) may be looking to offload some of their exposure to the most speculative assets such as meme coins, given the risks associated with holding such assets into a potential slowdown.

As several top crypto experts have pointed out, the overall investment thesis and broader narrative surrounding Dogecoin and its meme coin peers have deteriorated. Some of this is due to the infinite supply of Dogecoin, which can hit the market at any time. Additionally, the reality is that Dogecoin's price movements are primarily driven by hype and celebrity endorsements, and the fact that roughly 90% of the outstanding Dogecoin supply is controlled by a small number of wallets. In other words, if just a few large investors start selling their stakes en masse, we could be in for a much more brutal sell-off in the year to come.

Of course, the inverse is also true-such concentration of any asset class can mean that despite an infinite potential supply, so long as these "whales" continue to soak up new DOGE created and hold onto their existing positions. However, given the recent downward momentum in this meme token, I think retail investors considering whether Dogecoin may have a place in their portfolio may be thinking twice about making such a move.

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Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Source: “AOL Money”