PEPE Leads Memecoin Gains Amid Post-Holiday Crypto Market Altcoin Rally

PEPE, the Ethereum-based memecoin inspired by a viral frog character, surged by over 34% following a bold prediction by crypto influencer James Wynn. Wynn projected the token could rise from a $1.7 billion market cap to $69 billion by 2026, sparking immediate bullish sentiment. The prediction came as PEPE traded at its lowest value in nearly two years, down 79% from its all-time high. The move has reignited interest in memecoins and fueled speculation about a potential 'meme season' in early 2026 according to analysis.

The 24-hour trading volume for PEPE surpassed $600 million, the highest level in the past month, according to CoinGecko. This surge in volume reflects increased activity among short-term traders, many of whom are reacting to the prediction and broader market enthusiasm for meme assets according to market data. Other meme coins also posted gains, with Milady Cult Coin (CULT) doubling in price after Ethereum co-founder Vitalik Buterin changed his avatar to a Milady image.

Memecoins remain highly speculative and are driven primarily by trader sentiment and social media dynamics. Analysts caution that such tokens lack inherent utility and are characterized by extreme volatility. While the rally has generated optimism, many market participants remain cautious. The broader altcoin market is still struggling, with most meme coins down 70%–90% from their peaks.

Why Did This Happen?

James Wynn, known for his aggressive trading style, has a history of making high-leverage bets on crypto price movements. He previously gained notoriety by betting heavily on Bitcoin and earning $100 million in 70 days through high-leverage perpetual futures on platforms like Hyperliquid. Wynn's latest prediction for PEPE suggests deep conviction in the token's potential, but the exact size of his stake in the bet is not disclosed according to reports.

The prediction came at a time of renewed interest in memecoins, with some traders viewing them as a gateway for retail investors to enter the crypto market. Memecoins have historically played a role in attracting new users, even though they remain a niche segment within the broader crypto ecosystem. The recent rally has also been supported by increased open interest (OI) in derivatives markets, with PEPE's OI rising 77% to $441 million in the last 24 hours.

How Did Markets Respond?

The PEPE rally was accompanied by gains across the broader meme coin sector. The total market capitalization of memecoins rose to $39.45 billion, a two-week high, on January 2, 2026. BONK, a memecoin on the Solana blockchain, rose by 10%, while DOGE, the largest memecoin by market cap, gained 8% according to market reports. The market reaction reflects a shift in trader sentiment, with many viewing the rally as a sign of potential momentum for altcoins in 2026.

However, the rally has not translated into a broader recovery for the crypto market. Bitcoin was trading near $90,000 on January 2, up 2.7% from the previous day. While this represents a modest start to the year, traders remain cautious about its sustainability. Bitcoin options data suggests a bearish bias in the coming months, with many traders betting on a price decline.

Analysts remain divided on the outlook for meme coins and the broader crypto market. Some argue that meme coins play a crucial role in attracting attention and liquidity to the sector, even if they lack fundamental value. Others caution that the market is still in a consolidation phase and that further gains will depend on macroeconomic conditions and regulatory developments.

The PEPE surge and broader memecoin rally highlight the speculative nature of the crypto market and the role of influential traders in shaping short-term price action. While the rally has generated excitement, investors are advised to remain cautious given the sector's volatility and lack of long-term fundamentals according to market analysis.