Meme coin volume doubles but market cap drops on profit-taking

Meme coin trading volume recently surged due to trader profit-taking, even as the sector's total market capitalization declined, Cointelegraph reported. Citing CoinMarketCap data, the report noted that on Jan. 19, meme coin volume increased 106% from the previous day to $5.62 billion, while the collective market cap fell by 6%. Vincent Liu, Chief Investment Officer at Kronos Research, explained that this suggests a phenomenon driven by profit-taking and short-term trading rather than an influx of new capital. He added that in the current low-liquidity environment, a spike in volume can lead to price drops, as participation wanes and bid-ask spreads widen once traders have finished realizing their profits.