Memecoin News: Memecoin Trading Volume Briefly Spikes to $5.6B as Analysts See Profit-Taking and Cooling Momentum
Memecoin trading activity briefly surged on Monday, with total volume jumping to $5.62 billion, as traders appeared to lock in profits following a strong start to the year, according to analysts.Data from CoinMarketCap shows memecoin trading volume rose 106% day over day, even as the sector’s total market capitalization fell 6%, a divergence that analysts say typically signals short-term speculation rather than fresh capital inflows.Since then, trading activity has cooled sharply, with volume dropping back to around $3.6 billion, down more than 24% from the daily peak.Volume spike reflects churn, not new inflowsVincent Liu, chief investment officer at Kronos Research, said the combination of rising volume and falling market capitalization points to heavy churn rather than sustained bullish momentum.“A surge in volume alongside declining market cap usually reflects profit-taking, short-term flipping, and capital rotation,” Liu told Cointelegraph.“In thin liquidity conditions, elevated activity can still push prices lower even as volume spikes. The initial surge and subsequent drop in volume suggest speculative momentum has cooled.”Liu added that memecoin rallies often see brief bursts of activity around catalysts before participation fades.“Once profit-taking, liquidations, and rotation trades are absorbed, momentum traders step back, spreads widen, and liquidity thins. Volume tends to normalize quickly.”Memecoins opened 2026 strong before coolingThe memecoin sector began the year with a sharp rally, as total market capitalization climbed from $38 billion on Dec. 29 to $47.7 billion by Jan. 5, before losing momentum in the following days.Kadan Stadelmann, chief technology officer at Komodo Platform, said such moves are typical of highly speculative assets.“Memecoin rallies are usually driven by speculation rather than fundamentals,” Stadelmann said. “That makes them natural candidates for reversion rather than sustained appreciation.”He added that capital tends to rotate rapidly between tokens, creating sharp price swings rather than broad sector growth.“The result is constant rotation — one memecoin rises while others decline — rather than long-term stability.”Sector remains fragile after 2025 washoutMemecoins were among the hardest-hit segments during last year’s market turbulence. According to CoinGecko research analyst Shaun Paul Lee, more than 11.6 million crypto projects failed in 2025, the highest annual figure on record, with memecoins accounting for a significant share.The collapse reinforced growing caution among traders, even as short-term speculative interest continues to reappear during periods of volatility.Market intelligence platform Santiment also reported a recent uptick in memecoin-related social media activity, largely driven by discussions around rug pulls, failed launches, and short-lived rallies.Despite frustrations, Santiment noted that traders remain drawn to memecoins for their potential for quick gains.Bitcoin likely to dictate memecoin direction in 2026Analysts say memecoins remain one of the clearest indicators of overall market risk appetite — and their outlook in 2026 will depend heavily on Bitcoin’s performance.“Memecoins’ market performance this year will largely depend on Bitcoin,” Stadelmann said.“If Bitcoin continues to underperform hard assets like gold, as it did in 2025, that would likely be bearish for speculative sectors such as memecoins.”For now, analysts say memecoin activity reflects tactical trading rather than conviction, with traders quick to enter — and just as quick to exit — as liquidity conditions tighten, according to Cointelegraph.
