TLDR
- Memecoin popularity plummeted following the Libra token rug pull, with new token creation down 90% from February peak
- The launches of TRUMP and MELANIA tokens in January marked the top of the memecoin market
- Total memecoin market cap fell from $124 billion in December to $54 billion currently
- Despite the crash, established memecoins like DOGE, SHIB, and BONK continue to survive market cycles
- Experts predict memecoins will return in future cycles, though 99.99% will ultimately fail
The memecoin market has experienced a dramatic collapse following a series of high-profile launches and rug pulls. This sharp decline comes after a period of intense enthusiasm that saw trading volumes reach record highs earlier this year.
According to CoinGecko founder Bobby Ong, the memecoin market began its downward spiral after the launches of TRUMP and MELANIA tokens in January 2024. These launches marked the peak of memecoin activity.
The launch of US President Donald Trump’s memecoin on January 18 initially sparked a surge in activity. Pump.fun, a popular token launchpad, recorded an all-time high of $3.3 billion in weekly trading volume during this period.
However, this momentum quickly reversed. Trading volumes on Pump.fun have since plunged 63% from January to February. The decline highlights how quickly sentiment can shift in the volatile cryptocurrency market.
The total market capitalization of memecoins tells a similar story. Data from CoinMarketCap shows the sector hit an all-time high of $124 billion on December 5. That figure has since dropped to $54 billion.
The Libra Incident
The final blow to memecoin enthusiasm came with the launch of Libra (LIBRA). This cryptocurrency was reportedly “shared” by Argentine President Javier Milei. The launch turned into a disaster when insiders cashed out over $107 million.
This mass sell-off wiped out nearly 94% of Libra’s value within hours. Ong described the event as “the final nail in the coffin” for the current memecoin cycle.
The Libra incident shattered the illusion that memecoins were fair launches. Instead, it revealed the presence of insider groups profiting at the expense of regular investors.
Following the Libra debacle, metrics on Pump.fun showed an immediate decline. Both daily new token creation and graduated tokens fell by over 90% from their February peak.
Meme Market Cap
On CoinGecko, the Meme category market cap has fallen by 32% since its peak on February 3. Trading volumes have dropped even more dramatically, down 72% during the same period.
Despite the current downturn, some established memecoins have shown staying power. Tokens like DOGE, SHIB, and BONK have weathered previous market cycles and continue to maintain active communities.
Ong believes these survivors offer valuable lessons for creators looking to build longer-term assets in the space. The most successful memes have built “cult-like communities who are passionate about a cause.”
These communities create content organically and remain committed through market downturns. This grassroots support helps certain memecoins survive while thousands of others disappear.
Experts have long noted that memecoins tend to be “seasonal” in nature. They typically follow broader cryptocurrency market cycles, with periods of intense interest followed by lengthy downturns.
In the long run, Ong speculates that memecoins will follow an extreme power law distribution. He predicts that 99.99% will fail, while a tiny fraction rise to prominence and endure.
The current memecoin decline coincides with a broader market shift. In February, analytics platform Santiment noted that crypto might be heading into a healthier market cycle as interest in memecoins waned.
Attention has begun shifting back to established cryptocurrencies like Bitcoin and Ethereum, along with other layer-1 altcoins. This rotation suggests investors may be seeking more fundamental value after the speculative memecoin frenzy.
Broader Market
The broader cryptocurrency market has also faced challenges recently. Bitcoin fell by over 20% from above $100,000 to approximately $87,000 within the past month.
This decline occurred alongside a 5% drop in the S&P 500, suggesting macroeconomic factors may be influencing both traditional and crypto markets. Even President Trump’s comments about a strategic crypto reserve could not prevent these losses.
However, market veterans point out that bull markets are never straight lines upward. Previous Bitcoin bull cycles featured multiple 20%+ pullbacks before reaching new highs.
Some analysts, including Arthur Hayes, suggest the current dip could take Bitcoin as low as $70,000. Despite these short-term fluctuations, institutional interest in Bitcoin remains strong.
Major financial institutions including Standard Chartered and Bitwise recently predicted Bitcoin could reach $200,000 in the current market cycle. This suggests the broader crypto bull market may continue despite the memecoin sector’s troubles.
