Memecoins explode as 2026 begins – but the first cracks are showing

ambcryptoPublished on 2026-01-08Last updated on 2026-01-08

Abstract

The memecoin market surged over 20% in early 2026, adding $10 billion in under two weeks, significantly outperforming the broader altcoin market. PEPE led the rally with a 50% weekly gain, reflecting strong speculative appetite. However, signs of instability emerged as a whale sold 129 billion PEPE at a $151k loss, and open interest dropped 36% in 72 hours, erasing $200 million. Derivatives liquidations in tokens like FARTCOIN and PUMP pushed whales $747k underwater. The breakdown suggests FOMO is cooling, and further weakness in PEPE—which dominates memecoin flows—could trigger a flash crash, risking capital across high-risk crypto assets.

2026 kicked off with investors clearly chasing high risk.

Nothing illustrates this better than the memecoin market, which has seen a 20%+ rally so far, adding $10 billion in under two weeks. By comparison, the TOTAL3 index (market cap excluding BTC and ETH) jumped 6%.

This paints a clear picture of investor sentiment. The crypto index, which has hit a “neutral” zone, is aligning more with capital chasing meme assets rather than altcoins, reflecting strong speculative appetite among traders.

As a result, this shift in sentiment is showing up directly in price action.

According to CoinMarketCap data, the weekly performance of top memecoins is averaging over 20%. Notably, Pepe [PEPE] is leading the pack with an eye-catching 50% weekly rally, making it a key asset to watch.

Why does this matter? LookonChain spotted a whale selling 129 billion PEPE, taking a $151k loss. With PEPE leading the cycle, this raises a key question: Is this capitulation an early warning sign of a flash crash?

Memecoin uptrend faces potential flash crash risk

Hard data makes it clear why a memecoin-heavy rally can be risky.

On the derivatives side, OnChain Lens spotted massive liquidations in Fartcoin [FARTCOIN] and Pump.fun [PUMP], with profits flipping into losses as the market dipped, pushing whales $747k underwater.

PEPE isn’t far behind. Its Open Interest (OI) has dropped about 36% in less than 72 hours, wiping out nearly $200 million. The result? A sharp 15% breakdown that has effectively erased all of its weekly gains.

In this context, the recent whale selling doesn’t appear to be a fluke.

Looking closer, PEPE’s chart shows that the breakdown occurred as the memecoin tested an overhang resistance at $0.0000072, pushing it back toward pre-October crash levels, when it had peaked at $0.0000009.

Taken together, these signals indicate that FOMO is starting to cool off.

As a result, since PEPE has dominated the majority of memecoin flows in this cycle, any weakness here could ripple through the “broader market,” raising the risk of a crash that squeezes capital across other risk assets.

Final Thoughts

PEPE and other top memecoins saw massive gains, but whale selling and liquidations suggest FOMO is cooling off.
Since PEPE dominates memecoin flows, any further weakness could trigger a flash crash, impacting capital across other risk assets.

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