Meme coins rebound with a 30% increase: Is this driven by sentiment or the start of a trend

It has only been 5 days since the start of 2026, and Meme coins have already delivered an impressive performance. Since the beginning of the year, they have risen by a total of 30%, with a total market cap surpassing $47 billion, and a 24-hour trading volume reaching $9.2 billion — these figures reflect a clear shift in market sentiment. From the wait-and-see and panic at the end of 2025 to proactive moves in early 2026, retail funds are quietly flowing back. But the question is, is this rebound the start of a new trend or just a short-term emotional rally driven by sentiment?

Data Comparison: Meme Coins Outperform the Entire Altcoin Sector

From market performance, the strength of Meme coins is supported by data.

The most direct comparison shows that the overall increase of Meme coins far exceeds the TOTAL3 index (30% vs. 7.5%), indicating that capital is clearly concentrating into high-elasticity, high-volatility assets. Among them, PEPE’s 65% weekly gain is particularly eye-catching, even surpassing the average level of mainstream altcoins. This is not just the performance of a single coin but a sector-wide trend.

Behind the Rebound: Three Key Factors

Retail investors’ risk appetite phase-wise rebound

According to recent news, there was a noticeable panic and wait-and-see sentiment in the market at the end of 2025, which gradually dissipated towards the end of the year. As we entered 2026, retail investors began to reallocate funds into more volatile assets with stronger community narratives. This psychological shift is normal — when mainstream coins are sideways, high-volatility assets often become the first choice for seeking returns.

Changes in search popularity confirm this. The search volume for “Meme coin” related keywords has been rising steadily since early January, indicating increased market attention and discussion. This is a direct reflection of sentiment recovery.

Tax factors may have amplified early-year buying

This is an easily overlooked detail. Under the US tax framework, cryptocurrencies are not subject to the traditional “wash sale rule” applicable to securities. This means investors can cut losses at the end of the year and quickly re-enter positions at the start of the new year, creating concentrated buying. While this factor does not directly drive long-term trends, it can indeed amplify the strength of the early-year rebound.

Infrastructure upgrades support high-frequency trading

According to related news, major trading chains like BNB Chain and Solana completed performance upgrades in 2025. BNB Chain’s block time was reduced from 3 seconds to 0.75 seconds, with median Gas fees lowered to $0.01 per transaction; Solana is also optimizing transaction speed and costs. These technical improvements are crucial for Meme coin trading, as buying and selling often require extremely fast reactions. The enhanced infrastructure provides a technical foundation for this wave of Meme coin enthusiasm.

Risks to Watch Out For

However, there are also sober voices in the market. Meme coins are inherently high-risk, high-volatility assets, and the current rally is more like a sentiment and liquidity-driven phase.

From a trading perspective, some seasoned investors adopt strategies like “rising for 3 days in a row, then reducing positions; if no new high on the 4th day, fully exit.” This indicates that the holding period for assets like Meme coins is often very short, and risk management is critical. Historically, Meme coins’ rapid surges are often followed by swift crashes, and the lack of fundamental support is their fatal weakness.

Summary

The strong rebound of Meme coins in early 2026 is real, supported by data and market performance. Retail sentiment is indeed returning, and funds are concentrating into high-volatility assets. However, the sustainability of this rally remains to be seen — it could signal the start of a new altcoin cycle or just be a short-term emotional rebound.

The key factors are the continued inflow of funds and overall market environment changes. If mainstream coins continue to sideways, capital spillover might support Meme coins to keep rising; but if mainstream coins start a new upward trend, funds could quickly flow back, cooling down Meme coin enthusiasm. For participants, this is a high-opportunity but also high-risk period, requiring faster reactions and stricter risk management discipline.