The memecoin market underwent a brutal reset in 2025, resulting in one of the steepest declines since the sector became a dominant force in crypto speculation. After a euphoric memecoin mania that peaked in November 2024 and ultimately collapsed, selling pressure steadily took over. Liquidity dried up, momentum waned, and most meme coins went into extended drawdowns, significantly underperforming the overall market.
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Memecoin dominance in the altcoin market continued to erode throughout the year as risk appetite waned. By December 2025, this dominance had fallen to historic lows. This reflects widespread capitulation among individual participants and a clear shift away from high-beta speculative assets. Many traders exited their positions completely, reinforcing the view that the meme coin cycle has fully unfolded.
However, extreme pessimism often marks an important turning point. According to analysis by CryptoQuant’s Darkfost, the current compression in memecoin dominance closely mirrors previous structural lows observed in past cycles. Remarkably, the last time memecoin dominance reached comparable levels was just before the sector made a strong comeback with new liquidity, fresh narratives, and a flow of active speculation.
Memecoin dominance shows early signs of stabilization
Recent on-chain analysis highlights how much the memecoin sector has fallen relative to the broader altcoin market, and why some investors are starting to take notice again. According to the Darkhost framework, the key ratio compares the market capitalization of major meme coins to the market capitalization of major altcoins.
At the height of the speculative frenzy in November 2024, this ratio rose to around 0.11. This means that meme coins accounted for approximately 11% of the altcoin market total. This level reflects peak enthusiasm, high retailer participation, and aggressive risk-taking.
However, by December 2025, the same ratio had collapsed to around 0.032. In fact, memecoins had lost nearly two-thirds of their relative weight within the altcoin world. This sharp contraction coincides with a prolonged period of underperformance, a rotation of capital into larger assets, and a widespread capitulation after months of price declines.
Importantly, recent price movements suggest the bleeding may be slowing. Over the past few days, some of the largest meme coins have shown notable rallies, suggesting renewed speculative interest. Although this move is too early to confirm a complete reversal of the trend, it does suggest that the selling pressure is no longer unilateral.
For now, the data suggests that memecoin season is in a tentative stabilization phase rather than a confirmed one. Still, for high-risk investors, we have historically seen heavily compressed relative valuations like this before a sentiment-driven rally, as long as risks are managed carefully and expectations remain realistic.
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Technical rebound after a long downtrend
The memecoin market cap chart shows a clear change in structure after months of weakness. Throughout the second half of 2025, Memecoin's market capitalization has been on a decisive decline, forming a series of highs and lows while remaining below the 50-day moving average and 100-day moving average.
However, recent price trends suggest the first meaningful attempts at stabilization. Market capitalization has rebounded sharply from December lows around $35-38 billion and is now above its short-term moving average, back in the $46 billion range. This move was accompanied by a notable increase in trading volumes, indicating new participation rather than a purely technical rebound against thin liquidity.
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Despite this improvement, the overall trend remains cautious. The memecoin market cap is still trading below its long-term moving average, which continues to trend downward and is acting as overhead resistance near the $50 billion to $55 billion range. This suggests that although the downside momentum has slowed, the market has not yet moved into a solid uptrend.
Practically speaking, the chart shows a rescue bounce within a broader bearish structure. For memecoins to regain sustained momentum, the market will need to consolidate above current levels and regain higher moving averages. It shows that speculative capital is returning with conviction rather than opportunism.
Featured image from ChatGPT, chart from TradingView.com
