Memecoins fell 65% over 2025 as risk-taking behavior dropped among traders, but the tokens are seeing gains as positive sentiment returns to crypto.
Social media buzz around memecoins has jumped since the start of the year, matching the rise in market capitalization, which analysts say could mean risk appetite has returned to crypto.
Several memecoins have recently posted strong gains, and a speculative rally pushed the market value of memecoins up, which caught traders’ attention and sparked a rise in crowd interest, the market intelligence platform Santiment said on Wednesday.
Vincent Liu, the chief investment officer at trading firm Kronos Research, told Cointelegraph that traders are rotating back into liquidity-rich assets where reflexivity works fastest.
“Memecoins offer tight narratives, deep social coordination, and immediate upside asymmetry, making them a natural vehicle for risk re-engagement as sentiment turns,” he said.
“Memecoins typically lead when risk appetite returns. The rebound in the Fear & Greed Index from extreme fear toward neutral reinforces this shift, if majors confirm with volume, the rally can broaden. If not, memecoins remain a short-lived sentiment trade.”
Memecoins fell more than 65% over 2025, bottoming at a market cap of $35 billion on Dec. 19, the lowest level for last year, as risk-taking behavior dropped among traders and capital found more stable investments.
The memecoin market cap has since rebounded, crossing $47.7 billion on Monday, up from $38 billion on Dec. 29, according CoinMarketCap. As of Thursday, it has settled around $45 billion.
Memecoin transaction volumes also spiked, jumping from $2.17 billion on Dec. 29 to $8.7 billion on Monday, representing a 300% increase, before settling to around $5.22 billion on Thursday.
Liu said the rebound from previous lows is being driven by positioning resets and renewed retail participation rather than fundamental repricing, and momentum can extend in the near term if social traction and liquidity persist.
However, he warns that “memecoin rallies remain highly reflexive and vulnerable to sharp reversals once flow slows.”
Pav Hundal, lead analyst at Australian crypto exchange Swyftx, told Cointelegraph memecoins are one of the “cleanest temperature checks for risk appetite in crypto.”
“The next few days will tell us whether this move is just a short-lived overnight fever, or maybe a sign the market is starting to tolerate risk comfortably again,” he said.
“When altcoins run while Bitcoin goes sideways, it tells us that capital is moving further out on the risk curve. Historically, that kind of divergence tends to show us that when speculation outpaces the benchmark, it can be a prelude to a sharply sobering correction for any unchecked bulls.”
Bitcoin (BTC) has been drifting between $90,697 and $92,847 in the last 24 hours, according to crypto data aggregator CoinGecko.
Traders appear to have regained a risk appetite for now, but both Liu and Hundal said it could be a short-lived event.
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“Macro remains a key risk variable. Any escalation in geopolitical tensions or policy shocks, including US actions tied to Venezuela or broader EM instability, could quickly reverse risk sentiment, even as crypto-specific momentum improves,” Lui said.
Hundel said macro conditions have improved since late last year, but “this does to me smell like enthusiasm front running ahead of fundamentals.”
“Until we lock in more certainties on policy and politics, globally moves like this smell more like hope than conviction.”
