The memecoin market, once one of the most volatile yet exciting sectors in cryptocurrency, has suffered a significant decline over the past three months.
After reaching an all-time high of $137 billion in December 2024, the total market capitalisation has dropped by 56%, erasing much of the gains made following Donald Trump’s US presidential election victory.
The downturn has raised concerns among investors and analysts, many of whom had predicted that memecoins were operating in an unsustainable bubble.
The recent decline suggests that the market is now undergoing a severe correction, with many speculative assets losing momentum.
According to data from the Ecoinimist Markets page, the memecoin sector stood at $124 billion on 5 December 2024 but has since plunged to approximately $54 billion as of 5 March 2025.
This steep decline has been attributed to a variety of factors, including economic instability, insider trading scandals, fading hype, and growing concerns over regulatory oversight.
Memecoins surged in popularity towards the end of 2024, particularly after Donald Trump’s election victory in November. Investors speculated that the new administration’s stance on cryptocurrency could lead to further mainstream adoption.
The market was also fuelled by endorsements from celebrities and influencers, many of whom actively promoted memecoins across social media platforms.
By 8 December, the total market capitalisation of memecoins had climbed to an all-time high of $137 billion, driven largely by speculative trading. However, the rally proved to be short-lived.
In January, the launch of Solana-based memecoins associated with Donald Trump and First Lady Melania Trump briefly reignited interest.
The introduction of these tokens caused a temporary market rebound, pushing the total market cap to $115 billion during the inauguration weekend.
Despite this, the excitement faded within weeks, and by early February, the market had collapsed to $60 billion.
Industry analysts have pointed to several key reasons behind this decline. Many early investors who profited from the late 2024 rally took advantage of the peak to sell their holdings, which contributed to the market downturn.
Trading volumes have also dropped significantly, with fewer retail investors participating in the market as the hype surrounding memecoins diminishes. Another major challenge is the lack of real-world utility for memecoins compared to other cryptocurrencies that offer more tangible benefits and use cases.
In addition, competition has intensified, with new blockchain projects emerging that attract investor attention away from memecoins. Regulatory concerns over potential market manipulation and insider trading have further dampened sentiment, making investors hesitant to re-enter the space.
The co-founder of Zeta Markets, Anmol Singh, highlighted how unethical practices played a significant role in the downturn.
“Blatant exploitation as celebrities, key opinion leaders, cabals, and insiders seek to run up tokens by leveraging their influence and then take profit on the retail traders they bring in—fundamentally shaking confidence and trust among retail participants”, Singh explained.
These concerns have left many investors wary of re-entering the market, leading to continued price declines and diminished trading activity.
Shifting investor sentiment
As memecoins continue to decline, many investors are moving away from speculative assets and turning to more established cryptocurrencies.
Tokens such as Bitcoin ($BTC), Ethereum ($ETH), and AI-based cryptocurrencies have seen increased interest in recent months.
Unlike memecoins, these assets offer stronger fundamentals, long-term use cases, and greater market stability.
This shift is reflected in trading volume data, which shows a steady decline in memecoin transactions over the past three months. Without new capital entering the market, prices have continued to slide, pushing more investors to liquidate their holdings.
Despite the broader market decline, certain memecoins continue to dominate the sector. Dogecoin ($DOGE) remains the largest memecoin by market capitalisation, accounting for 53% of the total memecoin market.
Shiba Inu ($SHIB) holds the second position, with a market cap of $7.7 billion. Pepe ($PEPE) follows with a valuation of $2.9 billion, while The Official Trump ($TRUMP) memecoin holds a market cap of $2.6 billion.
While these tokens maintain a strong presence in the market, their future remains uncertain, especially as investor confidence continues to decline. Singh predicts that future memecoin launches will be approached with much greater caution.
Many traders who previously jumped into the market without thorough research may now demand stronger fundamentals before investing in speculative assets.
Can they recover?
Some industry experts believe that memecoins could regain popularity during the next bull market. Historically, speculative assets have experienced renewed interest whenever market conditions improve.
However, the sector now faces a challenging landscape. While memecoins were once driven by hype, community loyalty, and influencer endorsements, many investors have now grown more cautious.
If the sector is to recover, several factors must align. A renewed bullish sentiment in the overall crypto market could help restore confidence, particularly if major cryptocurrencies like Bitcoin and Ethereum rally.
Memecoin projects may also need to explore rebranding efforts, incorporating real-world utility to attract serious investors. Additionally, a fresh wave of influencer-driven hype cycles could play a crucial role in reviving interest, as has been the case with previous memecoin surges.
Comparisons have already been made between the memecoin crash and the non-fungible tokens (NFT) market downturn. An anonymous crypto researcher, known as wale.moca, pointed out similarities between the two.
“In NFTs, it was the idea that everyone would be living in the metaverse. For memecoins, it was the ‘supercycle theory’; young people buying memecoins to feel like part of a community. Then the bubble pops, and deflation is slower than expected”, they explained.
Another crypto enthusiast, using the pseudonym beaniemaxi, suggested that the worst may still be ahead for memecoins.
“Most of the big hyped ones are already down 90%, yet still worth hundreds of millions. Expect that to drop another 90%,” they stated.
Meanwhile, token launch activity has also dropped significantly. One of the major drivers of the memecoin rally in late 2024, Solana-based launchpad Pump.fun, has experienced an 80% drop in new token launches since its peak in January.
Data from Dune Analytics reveals that the number of new tokens launched per day fell from over 70,000 in January to just 53,000 by early February. The decline suggests that enthusiasm for launching new memecoins has significantly diminished.
Critics argue that platforms like Pump.fun played a major role in the bubble, allowing scam projects and rug-pulls to flourish. One crypto commentator offered a scathing critique of the platform and memecoins in general.
“Pump.fun sucked up all retail cash into memecoins, and now it’s collapsing. The hot money will flow back into real crypto, but this was the worst, most degenerate phase of trading. Memecoins are pure cancer, draining value, fueling scams, and setting crypto back. Glad it’s over.”
While some analysts believe a recovery is possible in future bull markets, the sector faces increased investor scepticism, declining trading volumes, and greater scrutiny over its long-term viability.
