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Patience continues to pay off
Last week, a study went viral showing the impact of missing the best days in the S&P 500. The findings revealed that missing just 10 of these days would erase half the profits, and after 40 days, investors would face losses.
We conducted the same analysis on a $10,000 investment in crypto via the Nasdaq Crypto IndexTM(NCITM) since its inception in January 2021. The results are even more striking for this emerging asset class.
In essence, missing the 10 most lucrative days would transform a 124% gain into a 30% loss, underscoring the value of consistent investment. This highlights how crypto, with its volatile and asymmetric nature, rewards patient investors who adopt a ”time-in-the-market” approach rather than chasing the elusive goal of ”timing the market.”
Market Highlights
Stablecoins surpass $230 billion in market value
The total stablecoins market capitalization surpassed $230 billion amid growing institutional demand for dollar-backed digital assets.
This showcases one of the most successful applications of crypto in enhancing traditional financial payments. It could also pave the way for new use cases that require a strong and reliable payment system.
SEC drops lawsuit against Ripple Labs
Ripple CEO Brad Garlinghouse announced that the SEC has dropped its lawsuit against Ripple Labs, concluding a legal battle that began in 2020.
This highlights the shifting focus of the new US administration and regulatory bodies on regulating crypto by rules rather than by enforcement, and may shape future regulatory approaches, leading to clearer guidelines and fostering innovation in the industry.
Tornado Cash removed from OFAC sanctions list
The US Treasury Department has lifted the sanction on crypto mixer Tornado Cash after OFAC exceeded its authority in November 2024.
This underscores how regulatory advancements enable the development and use of crypto applications without the risk of premature bans, paving the way for future privacy-preserving protocols to not necessarily be seen as a tool for illicit activity.
Market Metrics
All NCITM constituents had positive performance last week, with UNI standing out after an impressive 9.8% gain. In contrast, XRP had a more modest 4.6% increase despite the SEC dropping its Ripple lawsuit. The strong performance of all NCITM components helped it outperform its main allocation, BTC (+2.3%), after weeks of underperformance, underscoring the importance of recent regulatory advancements for the broader crypto market as 2025 progresses.
With the 2.9% NCITM upswing last week, crypto is potentially signaling a shift in its short-term outlook after several weeks of negative momentum amid a challenging macro environment. Other risk asset classes also recovered but, similarly to crypto, remain on a negative note year-to-date. Analogously to the past few weeks, gold remains the outperformer in 2025, up 15% as it consolidates above the psychological $3,000 landmark reached recently.
Dogecoin has outperformed other major cryptoassets over the past decade, while also exhibiting a low correlation to crypto and traditional assets. This creates a compelling argument for a portfolio allocation. We tested a Bitcoin-enhanced growth portfolio, which is a traditional 60/40 infused with 3% Bitcoin, and we introduced a modest 1% DOGE allocation. Since most prospective investors likely already hold Bitcoin, this offers a lens into how the two assets can complement each other.
Despite the small portfolio allocation, every approach delivered stronger returns. The benchmark returned 7.25% annually, while DOGE-enhanced portfolios reached as high as 8.95%. Sharpe ratios improved in almost all tests, indicating better risk-adjusted returns. Volatility did slightly tick up, but drawdowns remained largely contained. Even with no rebalancing, the max drawdown only deepened by a few percentage points, underscoring that even a 1% DOGE allocation adds meaningful punch without destabilizing the broader portfolio.
Rebalancing remains essential to capturing upside effectively. Without it, returns can plateau while risk quietly compounds. Monthly or weekly rebalancing offered the best balance, maximizing returns while keeping volatility and drawdowns in check, especially during periods of broader market stress, as we’ve recently seen. Given Dogecoin’s momentum-driven nature, a more strategic approach linked to broader crypto market cycles may offer even greater optimization beyond routine rebalancing.
With the right structure, a 1% allocation to Dogecoin isn’t reckless—it’s rewarding.
Bear Case
Despite strong fundamentals and a rich cultural legacy, Dogecoin’s recent rally, fueled by post-election memecoin mania, may have front-run its true cycle potential. As attention shifts to newer narratives, DOGE risks being seen as ’yesterday’s play,’ potentially underperforming even in a rising market. Still, that wouldn’t signal a flaw in its model, just a pause in a fast-rotating cycle.
Assuming a continued 10% compounded annual growth rate (CAGR) from its 2021 peak of $0.73, DOGE would be projected to land around $0.38 by 2025—still more than 2x from today’s levels but modest relative to past cycles. More notably, this would mark the first time Dogecoin fails to reach a new all-time high in a full market cycle.
Neutral Case
Dogecoin may not dominate headlines like it did at its peak, but it still holds cultural relevance and widespread recognition. In a scenario where the total crypto market cap peaks at $5 trillion this cycle and DOGE maintains a solid, albeit slightly reduced, market share of 3% instead of its previous 4%, this would result in a market capitalization of approximately $150 billion for DOGE.
At that valuation, DOGE would trade near $1 per coin, a ~5.5x gain from current levels around $0.185. This neutral case assumes Dogecoin retains its stature as the leading memecoin, despite increased competition, with stable adoption and renewed retail interest, but without the same euphoria of the last cycle.
Bull Case
If we take DOGE’s bottom price of $0.007 just before the last bull run began and fast-forward two years to the bottom of the current cycle at $0.0585, that move reflects a CAGR of 189%. If DOGE were to mirror this explosive growth, DOGE would reach approximately $1.42.
In this scenario, Dogecoin benefits from renewed memecoin mania, increasing real-world adoption, and stronger interest fueled by regulatory clarity and potential integration with major platforms like Elon Musk’s X. A full return of retail enthusiasm and broad cultural momentum could reestablish DOGE as the breakout asset of the cycle, potentially even doubling its all-time high.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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