Analysts say that Memecoin trader appeared to lock in profits after a good start to the new year. Trading volumes of memecoin spiked while marketcap for memecoin fell.
Memecoin volume trading jumped to $5.62 Billion on Monday. This is a 106% increase from the previous day. memecoin market capitalization fell 6%, according to crypto data platform CoinMarketCap.
Since then, the volume is down by more than 24 percent to $3.6 Billion.
Vincent Liu is the Chief Investment Officer at Kronos Research. He told Cointelegraph that a rise in the trading of memecoins alongside a declining market cap indicates heavy churn, rather than new capital entering the markets. This typically represents profit taking, short-term flipping and capital rotation.
“In thin liquidity conditions, elevated activity can still push prices lower even as volume spikes,” “He said” “The initial surge and subsequent drop in volume suggest speculative momentum has cooled.”
“Once profit-taking, liquidations, and rotation trades are absorbed, momentum traders step back, spreads widen, and participation thins. Volume often spikes briefly around catalysts before quickly normalizing.”
This year has started off with a bang.
Memecoins started the year strong as they saw their market capitalization surged from $38 billion On Dec. 29, to $46.7 billion on Jan. 5 before cooling down in the subsequent days.
Kadan Sadelmann, chief technology officer at the Komodo Platform powered by blockchain, said to Cointelegraph, gains in this sector usually result from speculation. They are also more likely than not candidates for reversion, rather than staying steady.
“The overall fundamentals of the memecoin market are poor and driven by speculation. This results in constant capital rotations between memecoins, causing price downturns in certain coins and appreciation in others,” “He said”
Related: PEPE, BONK post double-digit gains: Are memecoins back?
Turbulence in the crypto market decimated memecoins in particular last yearShaun Paul Lee is a CoinGecko analyst and he has compiled a report that shows the failure rate of cryptocurrency projects will reach over 11 million by 2025. That’s the highest ever level for an entire year.
Memecoins to be dependent on Bitcoins in 2026
Memecoins have also seen a rise in recent social media discussions. according Santiment is a market intelligence platform.
Santiment stated that traders are still attracted to tokens as they can make quick gains.
It is a risky bet to invest in Memecoins. Their success or failure could be determined by their price. temperature check on how much risk investors Are willing to accept.
Stadelmann predicts BitcoinBTCThis year, will have a major impact on the sector of memecoins. Its performance can either help or hurt the market.
“Memecoins’ market performance in 2026 will as usual depend on Bitcoin, which underperformed gold in 2025. The same could happen in 2026, which would be bearish for memecoins,” “He said”
Magazine: Memecoin degeneracy is funding groundbreaking anti-aging research
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Source: cointelegraph.com
