Memecoin traders appeared to be locking in profits on Monday after a strong start to the year, according to analysts, with memecoin trading volumes spiking while memecoin marketcap fell.
Memecoin trading volume spiked to $5.62 billion on Monday, rising 106% from a day earlier, while memecoin market capitalization fell 6%, according to crypto data platform CoinMarketCap.
The volume has since dropped back down to $3.6 billion, down more than 24% for the day.
Vincent Liu, the chief investment officer at Kronos Research, told Cointelegraph that a surge in memecoin trading volume alongside a falling market cap points to heavy churn rather than fresh capital entering the market and typically reflects 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.”
The Year Started With a Bang for Memecoins
Memecoins saw a strong start to the year as their market capitalization surged from $38 billion on Dec. 29 to $47.7 billion by Jan. 5, before cooling in the following days.
Kadan Stadelmann, the chief technology officer of the blockchain-powered Komodo Platform, told Cointelegraph that gains in the sector are usually the result of speculation and are likely candidates for reversion rather than holding 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.
Crypto market turbulence decimated memecoins in particular last year, driving the number of crypto project failures to over 11.6 million in 2025, the highest level recorded for a single year, according to a report by CoinGecko research analyst Shaun Paul Lee.
Memecoins Will Depend on Bitcoin in 2026
There’s also been a recent uptick in social media chatter around memecoins, according to market intelligence platform Santiment.
Discussions have centered mostly on frustration about repeated rug pulls, though traders remain drawn to the tokens for quick gains, said Santiment.
Memecoins are among the riskiest bets in crypto, and their success or failure can be a temperature check on how much risk investors are willing to take.
Stadelmann predicts Bitcoin (BTC) will play a big role in the memecoin sector this year and its performance will help or hinder 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.