Enthusiasm for memecoins on social media has skyrocketed because the start of the yr, coinciding with the rise in market capitalization, which analysts say could indicate that risk appetite for cryptocurrencies has returned.
Several memecoins have seen strong gains recently and a speculative rally has seen memecoins' market value rise, attracting traders' attention and resulting in a surge in mass interest, market research platform Santiment said on Wednesday.
Vincent Liu, chief investment officer at trading firm Kronos Research, told Cointelegraph that traders are returning to liquidity-rich assets where reflexivity works the fastest.
“Memecoins offer tight narratives, deep social coordination and immediate upside asymmetry, making them a natural vehicle for re-risking as sentiment changes,” he said.
There have been heated discussions about memecoins on social media amongst traders. Source: Santiment “Memecoins are likely to lead when risk appetite returns. The Fear & Greed Index's rebound from extreme fear toward neutral reinforces this shift. If the majors confirm volume, the rally may extend. If not, memecoins remain a short-lived sentiment trade.”
The market capitalization of the meme sector recovered
Memecoins fell greater than 65% throughout 2025, bottoming out on Dec. 19 at a market cap of $35 billion, their lowest level within the last yr, as traders' risk-taking behavior waned and capital found more stable investments.
According to CoinMarketCap, the memecoin market cap has since recovered, surpassing $47.7 billion on Monday, up from $38 billion on December 29. As of Thursday, it had settled at around $45 billion.
Memecoin transaction volume also skyrocketed, jumping from $2.17 billion on Dec. 29 to $8.7 billion on Monday, a 300% increase, before settling at around $5.22 billion on Thursday.
Both the market capitalization and transaction volume of memecoins have increased sharply within the last 30 days. Source: CoinMarketCap
Liu said the recovery from previous lows will probably be driven by positioning adjustments and renewed retail participation, somewhat than fundamental price adjustments, and that momentum could proceed within the near term if social traction and liquidity proceed.
However, he warns that “Memecoin rallies remain highly reflexive and susceptible to sharp reversals once the flow slows.”
Memecoins are a temperature check for risk tolerance
Pav Hundal, senior analyst at Australian crypto exchange Swyftx, told Cointelegraph that memecoins are certainly one of the “cleanest temperature checks for risk appetite in crypto.”
“The next few days will tell us whether this move is only a short-lived night fever or perhaps an indication that the market is beginning to comfortably tolerate risk again,” he said.
“When altcoins rise while Bitcoin moves sideways, it tells us that capital is moving further out on the chance curve. Historically, any such divergence shows us that when speculation outperforms the benchmark, it will probably be the prelude to a pointy sobering correction for any unchecked bulls.”
According to crypto data aggregator CoinGecko, Bitcoin (BTC) fluctuated between $90,697 and $92,847 within the last 24 hours.
Reversal to risk sentiment still possible
Traders appear to have grow to be risk-on again for now, but each Liu and Hundal said it might be a short-lived event.
“Macroeconomics remain a key risk variable. Any escalation in geopolitical tensions or policy shocks, including US actions related to Venezuela or broader instability in emerging markets, could quickly reverse risk sentiment whilst crypto-specific dynamics improve,” Liu said.
Hundal said macroeconomic conditions have improved because the end of last yr, but “that smacks to me of enthusiasm ahead of fundamentals.”
“Until we gain more certainty about policy and politics, global movements like this may smack more of hope than conviction.”
