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.
Source: TradingView (PEPE/USDT)
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.
