Once the hottest sector in the cryptocurrency market, memecoins have seen a drastic decline in investor interest, with data showing a 50% drop in trading activity since January. Market enthusiasm, which had propelled the total memecoin market capitalization to over $100 billion earlier this year, is now fading.
The downturn reflects both a broader cooling of speculative assets and waning liquidity. While some traders saw rapid gains during the memecoin rally, the recent pullback has raised concerns about sustainability and long-term viability. The shift in sentiment has led to plummeting values for major tokens, leaving investors to question whether the memecoin cycle will rebound or continue its downward trajectory.
Market Cap and Trading Volume Decline
In early 2024, memecoins outperformed most other crypto assets, riding a wave of speculative trading. January saw a particularly strong surge, fueled by the rise of political finance (PolitiFi) tokens and artificial intelligence-themed coins. Donald Trump’s inauguration in January provided further momentum to PolitiFi memecoins, driving demand for associated tokens.
However, the sector’s peak has since given way to a significant downturn. Market data indicates that memecoin trading volumes have fallen by an average of 50%, reflecting diminishing speculative interest. The Official Trump (TRUMP) token, which reached record highs last month, has dropped nearly 80% from its peak. AI-themed memecoins, including ai16z (AI16Z), have suffered similar declines.
Dune Analytics data also reveals a decline in activity on Solana’s Pumpfun, a popular platform for launching new tokens. On February 13, Pumpfun’s daily trading volume fell to $270 million, a 50% drop from its January 22 peak. Token creation has also slowed significantly, with just 47,312 new tokens minted that day—a 30% decrease from peak levels.
Signs of Resilience and New Speculation
Despite the overall decline, some memecoins have shown signs of recovery. The Official Trump (TRUMP) token saw a 17% price increase over the last 24 hours, while Dogwifhat (WIF) surged 21%, and Fartcoin (FARTCOIN) gained 10%. Whether these gains signal a broader reversal remains uncertain.
The next phase of the memecoin market could shift away from Solana to the BNB Chain. The recent launch of Test Token (TST) on BNB Chain has spurred speculation that memecoin activity could migrate to Binance’s ecosystem. Former Binance CEO Changpeng Zhao (CZ) has also influenced the market, with a recent post hinting at potential memecoin opportunities. However, CZ later indicated he would reduce his social media engagement, raising concerns that decreased hype could stall momentum on BNB Chain and beyond.
The broader market remains in flux, with political memecoins still reacting to developments surrounding Trump’s administration. TRUMP token sentiment has turned bullish in recent days, with increased accumulation pushing its Chaikin Money Flow (CMF) reading to $0.22. If sustained, analysts expect the token to trade above $3.40 soon. However, any reversal in market sentiment could drive prices lower, with potential corrections bringing TRUMP back to the $2.18 level, according to Fibonacci retracement models.
Data from TradingView suggests similar volatility for other PolitiFi tokens. The Department of Government Efficiency (DOGE) memecoin, unrelated to Dogecoin but tied to an initiative backed by Elon Musk and Trump, has climbed 18% in the past week. Analysts are watching its support at $0.14, with projections suggesting a potential rally toward $0.27 if positive momentum continues.
Despite these gains, memecoins remain a highly speculative asset class prone to sharp reversals. With overall interest declining, the sustainability of recent price rebounds remains in question. Whether the memecoin craze revives or fades further will likely depend on broader market trends and renewed investor enthusiasm.
