A recent analysis by prominent asset manager 21Shares shows that as little as a 1% allocation to Dogecoin can add meaningful returns to one’s portfolio.

In a research report shared on April 30, 21Shares painted an enticing narrative about Dogecoin's ability to add a meaningful punch to a portfolio

Prominent asset manager 21Shares has recently completed an analysis that showcases how even a 1% allocation to Dogecoin can add meaningful returns to one’s portfolio. In a research report shared on April 30, 21Shares put together an enticing narrative about the meme coin’s ability to add a punch to a portfolio.

The analysis dives into how diversifying a traditional 60/40 portfolio allocation with a modest percentage in Bitcoin and Dogecoin could impact returns.

Specifically, the analysis tested this narrative with a Bitcoin-enhanced portfolio, which allocates just 3% to Bitcoin and a meager 1% to Dogecoin in a typical 60/40 portfolio allocation (60% stocks, 40% bonds). Back-testing this rebalanced portfolio allocation against the previous performances of the four assets yielded rewarding results in all respects.

Highlighted metrics, such as cumulative returns, annualized returns, and the Sharpe ratio, increased significantly in the 1% Dogecoin-infused holdings compared to the benchmark. For instance, the cumulative returns in a monthly rebalanced portfolio increased from 32.29% to an impressive 40.89% with just a 1% allocation to Dogecoin.

Moreover, annualized returns also grew from 7.25% to 8.95%, with the percentage on all rebalancing periods trouncing the benchmark. Interestingly, the annualized volatility also increased, but the Sharpe ratio, which measures the risk-adjusted returns of a financial endeavor, saw an uptick. This indicated that, although more volatile, the reward-to-risk ratio increased with the addition of Dogecoin.

Conclusively, the research shows that including even a modest percentage of the prominent meme coin in one’s portfolio is more rewarding than risky.

Dogecoin Price Projections

Furthermore, 21Shares projected DOGE’s price expectations by the end of the bull cycle, classifying them into bear, base, and bull cases.

The analysis noted that if DOGE’s post-election jetlag continues, the asset may fail to hit a new all-time high this cycle for the first time in its history. In this bearish scenario, 21Shares predicted just an over 2x surge to $0.38 by the year’s end, citing a sustained 10% CAGR from its 2021 peak at $0.73.

Nonetheless, it expects Dogecoin to trend near $1 in a base case. Per the report, this over 5.5x return would occur if the global crypto market cap reaches $5 trillion this cycle and DOGE’s market share drops from 4% in the previous cycle to 3%. With its current circulating supply of 149.07 billion and the projected cap of $150 billion, the meme coin would reach $1.00. This would mark a new all-time high.

Meanwhile, the report projected an even better outlook in the best-case scenario. The analysis highlighted that the difference in Dogecoin’s bottom of $0.007 before last cycle’s rally and $0.0585 in this cycle is 189%. If the meme coin mirrors this price action, it would reach approximately $1.42 this cycle, which is over 7 times its current valuation.