Memecoins see market-cap slide despite surge in trading volume…profit-taking after early-year rally

Profit-taking is gaining traction in the memecoin market after a sharp early-year rally, widening the gap between trading volume and market capitalization.

According to Cointelegraph on the 20th (local time), daily memecoin trading volume jumped 106% from the previous day to $5.62 billion, while total market capitalization fell 6%. Volume later retreated to around $3.6 billion, pointing to a cooling-off phase after a brief bout of overheating.

The market is interpreting the move as a sign of churn trading and profit-taking rather than fresh inflows. Vincent Liu, chief investment officer (CIO) at Kronos Research, told Cointelegraph that when surging volume coincides with a decline in market cap, it suggests short-term trading and fund rotation have intensified, rather than new money entering. He added that in a thin-liquidity environment, prices can fall even as trading increases.

The memecoin market posted a strong rebound at the start of the year. Market capitalization, which stood at about $38 billion in late December last year, expanded to $47.7 billion in early January, but then quickly entered a correction. Kadan Stadelmann, chief technology officer (CTO) at Komodo Platform, said memecoins often move on speculative demand rather than fundamental value, making pullbacks after sharp spikes highly likely.

The volatility of last year also exposed the fragility of memecoin projects. According to a CoinGecko analysis, the number of failed crypto projects in 2025 topped 11.6 million, the highest on record, with a substantial share tied to memecoin-related projects.

Looking ahead, the memecoin trend is expected to be heavily influenced by Bitcoin’s moves. Stadelmann said the memecoin market in 2026 is also likely to ultimately follow Bitcoin’s direction, and if Bitcoin continues to underperform gold, it could become a headwind for memecoins.