In reality, deflation means demand is increasing faster than supply and inflation means supply is increasing faster than demand. A cryptocurrency with open-loop monetary policy may be both deflationary and inflationary at different times. Bitcoin and Dogecoin are no different in this respect; they both use open-loop policies that lead to massive volatility. Real-world currencies use closed-loop monetary policy to consistently target a particular level of inlation/deflation, but this is too "boring" for cryptocurrency.
In a technological economy, we would expect to see prices for real goods continually dropping, as decreasing prices are the expected result of market optimization. However, the Federal Reserve closes the feedback loop for consumers but injecting money into the financial sector. Thus to make the CPI constantly rise, everything that is tied to the financial sector (housing, cars, healthcare) shoots through the roof. And this isn't even just a direct handout to consumers looking to spend, but a bigger debt ballchain that they're expected to pay interest on!
Correct for the monetary expansion rate, rather than CPI, and you can get a reasonable idea of how the prices of real goods are actually dropping over time, as are the majority of people's salaries, as money gets sucked into the financial sector primarily as a side effect of loan securitisation, and crony taxation policies.
Is that really the (only) reason that there is a massive volatility? Why isn't gold more volatile than it is then?
I'd say that another reason for massive volatility is the newness of everything and the consequent lack of confidence that something about the system (technical or otherwise) won't break down in time.
Bitcoin does enable some interesting monetary ideas like demurrage, or constant recycling of the money supply. It also runs "open loop". This is implemented in some super small cryptocoins like Freicoin.