Memecoin Market Fluctuations: A Rise, a Fall, and What Lies Ahead
The excitement surrounding memecoins surged dramatically following the launch of former U.S. President Donald Trump’s TRUMP token on January 18. This launch ignited a frenzy of activity across crypto trading platforms, sending market volumes soaring. However, this enthusiasm proved short-lived. A series of failed launches and outright scams, culminating in the infamous “Libragate” scandal, dampened investor sentiment and caused a sharp downturn in the memecoin sector.
CoinGecko founder Bobby Ong recently examined this dramatic shift, suggesting that the frenzy had effectively burned itself out. According to his March 6 report, the memecoin landscape has suffered due to rug pulls and poorly executed token launches that shattered confidence in the space. A prime example was the Libra (LIBRA) rug pull, which triggered an immediate and dramatic decrease in trading activity on the Pump.fun launchpad. Specifically, both the number of newly created tokens and daily graduated tokens on the platform saw declines exceeding 90% since their February peak.
The Turning Point: TRUMP’s Launch and the Fall of Memecoins
Memecoin enthusiasm appeared to peak with the simultaneous launch of TRUMP and MELANIA tokens, which, according to Ong, siphoned liquidity and attention away from the broader cryptocurrency market. During this period, Pump.fun reached an all-time high of $3.3 billion in weekly trading volume, with investors flocking to capitalize on the hype. But what goes up must come down. By February, Pump.fun’s trading volumes had plunged by 63%.
The overall market capital for memecoins reflected this trend. Data from CoinMarketCap indicated that total market capitalization for memecoins had hit a record $124 billion on December 5, only to collapse to $54 billion in the months that followed. This enormous drop underscored the fragility of the memecoin market, which is often driven more by speculation and hype than by any tangible utility.
For a while, these fluctuations seemed like typical market cycles. However, the launch of Libra proved to be the final nail in the coffin for many investors’ faith in memecoins. Ong put it bluntly: “If the launch of both these coins wasn’t enough to end the memecoin mania, LIBRA was the final nail in the coffin, shattering the illusion that memecoins were fair launches to reveal cabals and insiders profiting off almost everyone else.”
The Libra Debacle and Investor Disillusionment
The Libra token had initially positioned itself as a cryptocurrency tied to Argentine President Javier Milei’s supporter base. However, it quickly turned into one of the most damaging examples of insider profiteering in recent memory. Insiders managed to cash out more than $107 million before the wider market had a chance to react—causing LIBRA’s value to crash by nearly 94% within hours. This blatant manipulation hit home for many investors, reinforcing concerns that memecoins are often designed to benefit a select few at the expense of the majority.
While the dramatic collapse of LIBRA dealt a heavy blow to trust in memecoins, Ong believes their existence will persist but in a vastly different market landscape. In his assessment, memecoins were always destined to be a seasonal phenomenon, thriving in hype cycles before fading into obscurity. He notes that while most will vanish, a handful might endure, following what he speculates as the “extreme case of power law,” where a mere 0.01% of these tokens survive while the rest fail.
A Market Shift: Renewed Interest in Bitcoin and Layer-1 Assets
As memecoin mania waned, broader market trends suggested that investors were redirecting their attention back to more established cryptocurrencies. On-chain analytics platform Santiment reported in February that the decline in memecoin interest might signal the beginning of a healthier market cycle, shifting focus back to Bitcoin (BTC), Ether (ETH), and other Layer-1 altcoins. This shift suggests that speculative enthusiasm is cooling, giving way to more sustainable investment strategies.
Yet, history has shown that not all memecoins will fade into irrelevance. Ong points to DOGE, SHIB, and BONK as prime examples of tokens that have withstood market cycles, hinting at possible longevity for those that successfully foster strong communities. According to Ong, “The likes of DOGE, SHIB, and BONK have weathered market cycles and offer lessons for memecoin creators looking to build a longer-term asset.”
The Key to Survival: Community and Organic Growth
Ultimately, the difference between memecoins that thrive and those that disappear seems to come down to community loyalty and engagement. Ong highlights how the most successful tokens are those that cultivate near-cult-like followings—groups of passionate supporters who align with the token’s cause, refuse to sell, and consistently generate organic content and narratives around the asset.
With the memecoin sector in decline, time will tell which tokens can defy the odds and maintain relevance. For now, Bitcoin and other fundamental assets appear to be reclaiming investor attention, leaving behind a fading memecoin frenzy that may not return in the same form.
