21Shares: 1% Dogecoin Allocation Boosts Portfolio Returns by 23%
2min read 21Shares, a prominent crypto investment firm, has highlighted the potential role of Dogecoin (DOGE) in diversified, high-return investment portfolios. According to their analysis, a modest 1% allocation to Dogecoin could significantly enhance portfolio returns without substantially increasing risk.
The firm's April report evaluated the performance of Dogecoin when added to a Bitcoin-enhanced growth strategy. The stress-testing of portfolios revealed that a baseline portfolio, consisting of a conventional 60/40 mix of stocks and bonds, returned 7.25% annually. In contrast, including a 3% Bitcoin and 1% Dogecoin allocation increased annualized returns to as high as 8.95%. The Sharpe ratios improved in nearly all simulations, indicating better risk-adjusted performance.
While the addition of Dogecoin introduced some volatility, the increase in maximum drawdown was only marginal. The report emphasized the importance of rebalancing, especially on a monthly or weekly basis, to maintain return potential and prevent risk from accumulating during turbulent markets. The firm attributed Dogecoin’s effectiveness to its low correlation with both traditional assets and the wider crypto market, along with a strong historical return profile. This makes Dogecoin a viable diversifier rather than just a speculative meme.
The report outlined three price projections for Dogecoin in the current market cycle: a bear case, a neutral case, and a bull case. In the bear case, 21Shares argued that Dogecoin’s recent rally may have already priced in much of its cycle potential. If the token compounds at 10% annually from its 2021 high of 0.73, it would reach approximately 0.38 by late 2025. This would still be more than double its current value but would mark the first time Dogecoin fails to set a new all-time high within a full market cycle.
In the neutral case, the firm assumed the total crypto market cap would peak at $5 trillion, with Dogecoin maintaining a 3% share. This scenario would result in a DOGE market capitalization of about $150 billion, implying a price near $1 per coin. This assumes the token continues to lead the memecoin category while adapting to increased competition and changing retail trends.
The bull case relies on historical cycle growth. Between its 2018 low of $0.007 and the 2022 cycle bottom of $0.0585, Dogecoin posted a compounded annual growth rate of 189%. If DOGE mirrors that trajectory this cycle, it would rise to approximately $1.42. To achieve this, 21Shares said the token would need support from renewed retail enthusiasm, increased adoption, and integration with platforms such as X.
The firm concluded that with proper structure and rebalancing, a small allocation to Dogecoin is not reckless but potentially rewarding. This analysis underscores the potential of Dogecoin as a strategic addition to diversified investment portfolios, offering the possibility of higher returns with managed risk.
