Social media buzz about meme coins has skyrocketed since the start of the year, coinciding with a rise in market capitalization, which analysts say could mean risk appetite is shifting back towards cryptocurrencies.
Several meme coins have recently recorded significant price increases, and the speculative rebound has increased the market price of meme coins, which has attracted the attention of traders and caused an increase in the interest of the crowd, market information platform Santiment announced on Wednesday.
Vincent Liu, chief investment officer at trading firm Cronos Research, told Cointelegraph that traders are returning to liquid assets where reflexivity works the fastest.
“Meme coins offer a tight narrative, deep social alignment, and instant upside asymmetry, making them a natural vehicle for reintroducing risk as sentiment changes,” he said.
“Typically, when risk appetite returns, memecoins take the lead. A rebound in the Fear & Greed Index from extreme fear to neutral reinforces this shift, and gains could extend if the big players see confirmation in volume. Otherwise, memecoins remain a short-lived sentiment trade.”
Meme sector market capitalization recovers
Memecoin has fallen more than 65% since 2025, bottoming out at a market cap of $35 billion on December 19, its lowest level last year, as risk-taking behavior among traders declined and capital sought more stable investments.
The market cap of meme coins has since recovered, rising from $38 billion on Dec. 29 to more than $47.7 billion on Monday, according to CoinMarketCap. As of Thursday, it had settled at about $45 billion.
Meme coin trading volume also skyrocketed, increasing 300% from $2.17 billion on December 29 to $8.7 billion on Monday, before settling at around $5.22 billion on Thursday.
Liu said the recovery from past lows has been driven by repositioning and renewed influence of retail participation rather than fundamental re-pricing, and if social traction and liquidity persist, the momentum could expand in the short term.
However, he cautions that “the meme coin rally remains highly reflexive and vulnerable to sharp reversals once the flow slows down.”
Memecoins conducts a temperature check on risk appetite
Pav Hundal, principal analyst at Australian crypto exchange Swyftx, told Cointelegraph that memecoins are one of the “cleanest temperature checks on crypto risk appetite.”
“The coming days will tell whether this is just an overnight frenzy or a sign that the market is starting to feel comfortable accepting risk again,” he said.
“Bitcoin flattening while altcoins rallying indicates capital is moving further out on the risk curve.Historically, this type of divergence shows that when speculation outperforms the benchmark, it can portend a sharply cooler correction for unchecked bulls.”
According to cryptocurrency data aggregator CoinGecko, Bitcoin (BTC) has fluctuated between $90,697 and $92,847 in the past 24 hours.
A reversal in risk sentiment remains possible
Traders appear to have regained their risk appetite for now, but both Liu and Hundal said that could be a short-term event.
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“Macro remains an important risk variable. Risk sentiment could quickly reverse, even if crypto-specific momentum improves, if geopolitical tensions and policy shocks intensify, including US actions related to instability in Venezuela and a wide range of emerging markets,” Liu said.
Hundal said the macro environment has improved since the end of last year, but “it smells like enthusiasm is getting ahead of fundamentals.”
“Unless we have more certainty about policy and politics, these global movements smell more like hope than certainty.”
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