Memecoin traders appeared to be taking profits on Monday after a strong start to the year, with memecoin market capitalization falling while memecoin trading volume soared, analysts said.
Memecoin trading volume soared to $5.62 billion on Monday, up 106% from the previous day, while memecoin market capitalization fell 6%, according to cryptocurrency data platform CoinMarketCap.
Volume has since fallen to $3.6 billion, down more than 24% for the day.
Vincent Liu, chief investment officer at Cronos Research, told Cointelegraph that the surge in memecoin trading volume as market capitalization declines is indicative of intense liquidity, and typically reflects profit-taking, short-term reversals, and capital rotation, rather than an influx of new capital into the market.
“In a situation of thin liquidity, even if trading volumes spike, prices may fall due to increased activity,” he said. “The initial spike and subsequent decline in volume suggests that speculative momentum has cooled.”
“As profit taking, liquidation, and rotation trades are absorbed, momentum traders retreat, spreads widen, and participation declines. Trading volumes often spike briefly around the catalyst before quickly normalizing.”
The year started with a bang for meme coins
Memecoin’s market capitalization jumped from $38 billion on December 29th to $47.7 billion by January 5th, getting off to a strong start this year, but then fell in the following days.
Kadan Stadelmann, chief technology officer of the blockchain-powered Komodo platform, told Cointelegraph that gains in the sector are typically the result of speculation and are more likely to be candidates for a return than to remain stable.
“The fundamentals of the memecoin market as a whole are poor and driven by speculation. As a result, capital constantly circulates among memecoins, causing the price of certain coins to fall and others to rise,” he said.
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According to a report by Sean Paul Lee, a research analyst at CoinGecko, the turmoil in the crypto market has led to a sharp decline in meme coins, especially last year, with the number of failed crypto projects reaching more than 11.6 million in 2025, the highest level in a single year.
Meme coins will become dependent on Bitcoin in 2026
According to market intelligence platform Santiment, social media conversations surrounding meme coins have recently become more active.
Santiment said that while traders are still drawn to the token for quick profits, the discussion has largely centered on complaints about repeated lag pulls.
Memecoins are one of the riskiest bets in cryptocurrencies, and their success or failure could serve as a gauge of how much risk investors are willing to take.
Stadelman predicts that Bitcoin (BTC) will play a big role in the meme coin space this year, and that its performance could help or hinder the market.
“The market performance of memecoins in 2026 will depend on Bitcoin as usual. Bitcoin underperformed gold in 2025, and the same could happen in 2026, which would be bearish for memecoins,” he said.
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