Taking Over 2026 Altcoins: Why the Memecoin Rally Has Reawakened the Market

Rebound Starting from the Bottom of the Bearish Mood (FUD)

After the extreme FUD market at the end of 2025, the cryptocurrency market has begun to recover in an unexpected way. Contrary to many market participants’ expectations, it was not Bitcoin or Ethereum that ignited the early 2026 revival, but the Memecoin sector.

On December 19, the total market capitalization of Memecoin had plummeted to $35 billion. Amidst retail investors’ risk tolerance hitting its lowest point of the year, the market post-Christmas took a sharp turn. As Bitcoin (currently $90.55K, weekly +0.99%) lost its sense of direction, investors’ focus naturally shifted toward higher volatility assets.

The Entire Memecoin Sector Rebounds

A broad recovery across the sector, not just a single “bubble coin,” is underway. According to CoinMarketCap data, the total market cap of Memecoin increased from $38 billion on December 29 to over $47.7 billion, a rise of about $10 billion in just a few days.

Weekly performance of major tokens:

• DOGE: Currently $0.14, weekly +5.80% (peaking around 20% increase)
• PEPE: +15.82% (peak 64.81% increase)
• BONK: +24.18% (a key player in the SOL ecosystem)
• PENGU: +16.91% (on-chain attention surging)
• SHIB: +18.37%

Trading volume also tripled. From $2.17 billion on December 29 to $8.7 billion on Monday, indicating not just price appreciation but a substantial return of liquidity and interest.

Technical Insights Supporting the Rebound

From a macro perspective, TOTAL3 (market cap excluding BTC) is at a critical turning point. Testing the 200-day moving average around $848 billion and the medium-term trendline, a breakout with high volume could push the technical target toward $900 billion.

The Memecoin sector shows a clear systematic strengthening trend, with multiple assets across ETH (currently $3.10K, weekly +1.43%) and SOL ($138.53, weekly +7.43%) ecosystems rebounding simultaneously. This suggests resource reallocation across the entire sector rather than short-term speculation on individual tokens.

Rapid Expansion of Leverage Positions: Momentum of a Bull Market and Hidden Risks

On-chain analysis affirms the current rebound but also reveals warning signals.

Rapid increase in derivative market positions:

• DOGE: Open interest up 45.41% in the past 24 hours to $1.94 billion
• PEPE: +33.32% to $514 million
• BONK: Rapid expansion phase
• PENGU: +69.04%

Simultaneous growth in open interest and trading volume typically indicates genuine long position building by leveraged traders. This is not short covering but the opening of large new bullish positions.

However, considering the limited fundamental support for Memecoin, this rapid leverage accumulation carries liquidation risks. When sentiment reverses, a chain reaction of forced liquidations could occur.

Solana Could Benefit: Altcoin Demand Starting from Memecoin

Historically, the Memecoin boom first spread from the SOL (currently $138.53, weekly +7.43%) ecosystem and then expanded to the broader altcoin market.

Memecoin has become a major growth engine for Solana in recent years, driving user activity and cultural influence. Igor Stadnyk, co-founder of True Trading, points out that while Memecoin acts as a liquidity engine, Solana’s next growth phase may come from more sustainable applications such as on-chain perpetual futures and AI-native trading agents.

Market Participants’ Question: Is This the Beginning of Recovery or a Trap?

The current situation is at a complex crossroads. Optimists see the Memecoin rebound as a sign of risk appetite returning, with spillover into altcoins and major cryptocurrencies.

Conversely, features like social media-driven growth, concentrated leverage, and significant divergence from all-time highs resemble past “bull trap” scenarios.

Traders are advised not to follow blindly but to practice strict risk management. Memecoin often functions as a “canary in the coal mine” for market sentiment, and rebounds during extreme FUD phases can either signal the start of a major rally or be just a temporary bounce.

What is certain is that Memecoin has led the first wave of the 2026 crypto market rally. Whether this rebound marks the beginning of a new bull market or ends in overheating will become clear in the coming weeks.