Why Dogecoin Is Skyrocketing This Week

Key Points

• Dogecoin's valuation has surged over the past week thanks to bullish momentum for the broader crypto market.

• Investors are buying into cryptocurrencies in response to bullish macroeconomic and political indicators.

• The U.S. House of Representatives will begin hashing out major new cryptocurrency legislation on Monday and continue discussions through the week.

• 10 stocks we like better than Dogecoin ›

Dogecoin (CRYPTO: DOGE) has seen an explosive rally amid bullish momentum for the crypto market this week. Its token price was up 17.6% over the past seven days of trading. Meanwhile, Bitcoin and Ethereum were up 9.1% and 17.1%, respectively. (CRYPTO: ETH)(CRYPTO: BTC)

Investors have piled into cryptocurrencies over the past week in response to indications that macroeconomic and political conditions could be aligning to power a sustained bull run. Despite the recent rally, Dogecoin's token price is still down roughly 37% year to date.

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Dogecoin is rallying as the crypto market picks up steam

Investors are betting that the Federal Reserve will institute more cuts for the benchmark interest rate than had previously been anticipated. If so, substantial rate cuts could power big gains for cryptocurrencies and other speculative investments. Signs of support for the crypto industry from the Trump administration and the Republican-controlled Congress are also boosting valuations. Bitcoin's price climbed above the $118,000 mark for the first time on Friday and has continued to move higher in subsequent trading, and the bullish momentum has extended to Dogecoin and other tokens.

What's next for Dogecoin?

Starting on Monday, the U.S. House of Representatives will begin hashing out new cryptocurrency legislation. Debate on three new pieces of legislation to establish new regulatory frameworks for the cryptocurrency industry will take place through Friday, and House Republicans have dubbed the upcoming legislative stretch "Crypto Week."

While key details still have to be hashed out on the three new bills, investors broadly see the laws as being bullish catalysts for cryptocurrency valuations. Given that Republicans hold a majority in the House, there appears to be a good chance that the bills will be passed and then sent to the Senate. "Crypto Week" could power another run of gains for Dogecoin and other cryptocurrencies, but investors should move forward with the understanding that the token is a high-risk, high-reward investment.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.