The government efficiency department (DOGE) led by Musk released its "annual report card" at the end of the year: the number of federal employees has significantly decreased, but federal spending continues to rise, contrasting with the expectation at the beginning of the year to "focus on efficiency and reduce the deficit." Meanwhile, Dogecoin has fallen below the $0.13 mark, with futures trading volume expanding to $260 million from a very low base, and most mainstream and meme assets have seen declines of about 40%–80% since Trump took office, indicating a contraction in market risk appetite. Against the backdrop of a mismatch between fiscal reality and political narrative, the prices and sentiment of DOGE-related assets are entering a phase of "liquidity caution and shrinking expectations," more dependent on key price levels and macro signals in the short term, rather than on the statements of a single individual.
As of December 24, 2023, Beijing time, the price of Dogecoin has fallen below the $0.13 line, with the latest round of declines accompanied by a futures trading volume that has increased approximately 53,000% to $260 million, indicating a sharp rise in leveraged speculation. The market closely associates this volatility with the "Musk DOGE annual report card" discussions that have been brewing on social media, which highlight the comparison of a roughly 9% reduction in federal employees and a phase of federal spending rising to about $7.558 trillion.
Core of the Event
On December 24, 2023, Beijing time, a series of data surrounding the government efficiency department (DOGE) led by Musk circulated widely in the media and on social platforms: according to phased statistics from sources like @YahooFinanceCN, the number of federal employees in the U.S. has decreased from about 3.015 million in January 2025 to about 2.744 million in November, a decline of nearly 9%. In contrast, according to widely cited fiscal information, federal spending has risen from about $7.135 trillion at the beginning of 2025 to about $7.558 trillion as of December 19, showing a divergence of "layoffs and spending increase."
The DOGE team claimed via social media in the summer that they had "saved a considerable budget scale" through job cuts and the termination of certain contracts, but this claim has not received unified endorsement from independent auditing agencies and contrasts with reports from some British media in February that noted "federal spending increased by about $40 billion year-on-year that month." Musk himself recently commented on the DOGE reforms, stating, "We have achieved some results, but I wouldn't lead again if given the chance," attributing part of the worsening deficit to issues left by the previous administration.
In this context, the crypto market views this "government efficiency report card" as the latest footnote to changes in macro risk appetite: on one hand, the initial DOGE reforms were seen as a symbol of "fiscal discipline and efficiency revolution," interpreted by some investors as a long-term positive signal for the valuation of risk assets; on the other hand, when phased data presents the reality of "successful layoffs but uncontrollable spending," the narrative discount begins to reflect in prices, with Dogecoin retreating from its highs and recently falling below the $0.13 mark.
The immediate feedback from the market is to interpret this "DOGE report card" as a symbol of the unexpected difficulty of fiscal tightening, exacerbating cautious pricing for high Beta crypto assets.
The Triple Incentives of News, Funds, and Sentiment
From the news perspective, the storyline of DOGE reforms has undergone a complete cycle from high expectations to skepticism within a year. At the beginning of the year, the market saw hard indicators of "the federal employee base of about 3.015 million will gradually shrink," coupled with Musk's frequent statements, packaging DOGE as a model project for "reshaping Washington with technology and management"; by mid-year, the team updated their phased results on X, claiming significant budget savings through layoffs and contract adjustments; by the end of the year, the media began to use the contrasting data of "employee reduction of about 9%, while spending has risen to over $7.5 trillion" to question the true impact of the reforms on the overall fiscal curve.
On the funding side, Dogecoin's volatility is highly representative. Around December 24, as the spot price fell below $0.13, the derivatives trading volume surged approximately 530 times to $260 million from a very low base, reflecting more short-term bearish and right-side momentum funds' high-leverage speculation rather than orderly long-term capital accumulation. In terms of trading structure, the combination of "spot selling pressure + futures volume increase" resembles a clearing phase rather than a long-term allocation driven by fundamentals.
Sentiment is highly polarized. On one side are MAGA supporters and Musk fans, emphasizing that "a 9% layoff is a historic achievement, and spending pressure mainly comes from legacy debt and interest expenses," continuing to give high marks to DOGE reforms; on the other side are institutional critics and some media questioning, "Under Republican leadership, total spending still increases, indicating that the so-called efficiency reforms have not changed the trajectory of the deficit." Within the crypto circle, this political divide is quickly projected into asset price discussions: supporters emphasize that "short-term data cannot negate the long-term direction of reform," while opponents use DOGE's decline and breakdown to illustrate the disappointment of "narrative fulfillment falling short."
Under the triple pressure of ongoing news controversies, short-term speculative funding, and politicized sentiment, the price elasticity of DOGE-related assets has been amplified, but overall risk appetite is clearly leaning towards caution.
Deep Logic: Mismatch Between Macro Fiscal and Crypto Cycle
To understand the current market situation, one must return to a larger macro framework: in 2025, the U.S. is hovering at high interest rates, with total debt rising and fiscal spending continuing to increase, which effectively widens the valuation discount for high Beta assets. The "efficiency reform" represented by DOGE was originally viewed by some market perspectives as a path to limit spending growth and improve deficit expectations in the coming years, but now the phased data shows "total spending rising from about $7.135 trillion to about $7.558 trillion," complicating this narrative.
At the same time, the crypto market itself is also in a cycle of moving from high expectations to clearing. According to statistics from accounts like Beijian Blockchain, since Trump took office, BTC has fallen about 18%, ETH has dropped about 10%, while high Beta assets like XRP, SOL, DOGE, ADA, and AVAX have generally seen declines of about 40%–80%, with Dogecoin down about 68%. This data indicates that the market is treating assets with heavier narrative components and weaker fundamental support with a higher risk discount, and the "politics + personality + meme" narrative carried by DOGE has become a target for priority liquidation in this phase.
Historically, many viewpoints attempt to compare the current environment with the 2020 period of "cash checks + zero interest rates + relatively friendly regulation," suggesting that if a new round of fiscal stimulus or regulatory attitude improvement occurs around 2026, it could reignite the crypto bull market. However, such judgments are more a matter of market expectations or scenario extrapolation rather than established policy commitments. What can be replicated from 2020 is the macro combination of "loose liquidity + high risk appetite"; what cannot be replicated is the extreme interest rate position and the fresh narratives of DeFi/NFT.
In terms of on-chain and structural data, what currently dominates DOGE's price is still technical levels and trading structure, rather than any significant on-chain activity or large-scale network effect expansion signals. The long-term logic proposed by DOGE supporters of "moderate inflation, suitable as a payment medium" is unlikely to offset the valuation pressure brought by macro tightening and political disputes in the short term.
The deep logic can be summarized as: fiscal reality and macro liquidity constraints are inversely testing the crypto market's tolerance for various narratives, and DOGE happens to be at the forefront of this testing.
Bull-Bear Game: Efficiency Dividend Expectations vs. Technical Breakdown Reality
On the bull side, the logic mainly focuses on three points. First, the reduction of federal employees from about 3.015 million to about 2.744 million is seen as the starting point of "structural reform," with bulls believing that efficiency improvements have the opportunity to offset some rigid spending growth over a longer cycle, gradually narrowing deficit expectations; second, some viewpoints anticipate that if the U.S. adopts a certain degree of fiscal support in the coming years under economic slowdown pressure, while the regulatory environment becomes clearer and friendlier to crypto, it could provide a new round of liquidity soil for high-elasticity assets including DOGE; third, from the asset attribute perspective, DOGE's "relatively moderate inflation + high circulation + cultural consensus" is viewed by bulls as a convergence point of mid-to-long-term monetary narrative and internet cultural asset narrative.
The bear logic, on the other hand, focuses more directly on the current hard data and technical performance. First, the widely cited fact at this stage is that federal spending has risen from about $7.135 trillion at the beginning of the year to about $7.558 trillion as of December 19, with the total spending curve not showing significant convergence signs, which corresponds to a higher discount rate requirement for high-risk assets against the backdrop of high interest rates. Second, DOGE's price has experienced a significant correction in 2025, recently falling below $0.13, with key support areas being breached multiple times. Third, the futures trading volume has surged to $260 million from a very low base, reflecting more short-term leveraged funds' speculation rather than a stable entry of long-term value buyers.
In this game, bulls are betting on the long-term value of "efficiency reform + future policy space + network effects," while bears rely on "current spending and debt reality + technical breakdown + leveraged clearing" as near-term pressures, with a significant mismatch in time dimensions between the two.
This mismatch has also produced ripple effects on other assets. High-elasticity sectors represented by SOL, PEPE, AVAX, and TRUMP have generally seen declines of about 50%–80% since Trump took office, indicating that the market currently favors assets with visible cash flow and established network effects (such as BTC and ETH), while taking a faster position adjustment pace on assets with overly high narrative weight. As one of the most symbolic meme assets, DOGE naturally becomes an amplifier of sentiment adjustments.
Outlook: Conditions for Price Repricing and Observation Coordinates
In the short term (the next 1–3 months), the key for Dogecoin's technical aspect lies in whether it can regain a position above the breakdown area, easing the current structure of "spot selling pressure + leveraged speculation." If the price maintains a sideways trend in the low area with gradually declining trading volume, it may form a weak recovery after a phase of clearing; if it continues to decline with increasing volume and a trading structure dominated by high leverage, it indicates that sentiment and funds are still searching for a new equilibrium point.
In the medium term (looking towards 2026), the key variables determining whether DOGE and broader crypto assets can achieve a new round of pricing will be a combination of three factors: first, whether the U.S. fiscal path continues to expand and converge moderately, or is forced to impose stricter constraints on the deficit at some stage; second, whether interest rates and inflation show changes sufficient to support a policy shift, thereby releasing signals of looser liquidity; third, whether the regulatory framework becomes clearer and more predictable at the legislative and enforcement levels, thereby compressing uncertainty premiums. If these conditions combine favorably, it may raise overall risk appetite again, bringing high-elasticity assets including DOGE back into market focus.
In the long term, for DOGE to break free from its pure meme positioning, it still needs to make substantial progress in three directions: first, real application scenarios for payments and small transfers need to provide more competitive solutions in terms of merchant acceptance, on-chain efficiency, and fee structures; second, ecological cooperation and developer participation need to shift from "single personality IP-driven" to more decentralized and diverse community and application-driven; third, the controversy surrounding "unlimited issuance and moderate inflation" needs to be addressed through more transparent mechanisms and more comprehensive education to build a stable long-term value framework.
On the risk side, several scenarios still need to be monitored: if future fiscal and monetary policies remain tight simultaneously, stronger regulatory uncertainties arise, or if the macro economy experiences unexpected downturns, it will pressure the valuations of risk assets; if political and public opinion controversies surrounding DOGE reforms further intensify, it may also compress the emotional premium highly tied to Musk's IP.
In a high-uncertainty environment, the analytical framework surrounding meme assets should shift from "single-point news-driven" to a risk pricing perspective that integrates "news/funds/sentiment" across three axes, with DOGE's "report card" being just one typical stress test among them.
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