[DigitalToday reporter Jinju Hong] After a sharp September surge, meme coins have quickly given back gains, shifting market attention from the size of the jump to whether the rally can be sustained. The rise is seen as the combined result of bitcoin strength, short-position liquidations and a recovery in risk-asset appetite, rather than coin-specific positive news.

On Oct. 1 (local time), blockchain media outlet Decrypt reported that as bitcoin rose 7.2% on Sept. 21 to 22, Pepe (PEPE) gained 22.2%, Dogecoin (DOGE) rose 13.8% and dogwifhat (WIF) climbed 17.7%. Over the same period, about $919 million worth of short positions were liquidated in the crypto market.

The absence of clear, coin-specific catalysts for particular meme coins suggests the surge was amplified by broad buying sentiment and leveraged liquidations. As bitcoin strengthened, risk appetite recovered, and short positions betting on declines were forcibly liquidated, bringing in additional buying, the report said.

Meme coins often have thinner liquidity than bitcoin or major altcoins, making prices sensitive to supply-and-demand changes. When demand concentrates, gains can widen, but when buying weakens, prices can also quickly reverse.

In particular, meme coin prices are seen as being driven more by attention, trading volume and investor sentiment than by traditional fundamentals such as performance, cash flow or protocol upgrades. Rising prices draw attention and bring in new participants, increasing trading, and the increased trading in turn amplifies price volatility.

Trading volume also rose noticeably during this rally. Pepe's derivatives trading volume increased by more than 260% in a single day during the upswing. PrimeXBT said a price rise accompanied by volume could be a relatively stronger move than a temporary spike seen in thin-liquidity markets. It added that whether volume continues is a separate issue.

By token, Dogecoin and Pepe are classified as meme coins with relatively broad trading bases. Both have greater market depth and a wider trading base than newer meme coins. Dogecoin, in particular, tends to respond quickly even without specific catalysts when risk appetite strengthens across the broader crypto market.

By contrast, newer meme coins such as WIF may see even greater price volatility. WIF rose 17.7% over the period and climbed more than 40% on a weekly basis. Its relatively small market size means changes in trading demand can have a larger impact on price, the report said.

Leverage is also a factor that magnifies meme coin price moves. In rising markets, forced liquidations of short positions can lead to additional buying, expanding gains. If the uptrend breaks, liquidations of long positions could occur in a chain reaction, potentially widening losses.

Key variables for the meme coin market going forward include bitcoin's direction, trading volume and open interest. If bitcoin shows a stable trend and rises again, investors may expand allocations to high-risk assets such as meme coins. If bitcoin turns weaker, meme coins could also be exposed to greater volatility.

Volume is a key indicator for judging whether a rally can continue. If volume holds alongside rising prices, it can be read as a sign that market participation is continuing. If only prices rise while volume falls, it may mean upward momentum is weakening.

Open interest also has a double-edged nature. A rise in open interest can be an indicator of market interest and expanded positions, but if prices reverse sharply it can increase the scale of liquidations.

Ultimately, what this meme coin rally showed was not the rate of gains itself but how long market participation continues. PrimeXBT analysed that an initial short squeeze lifted prices during the September rise, but as volume later fell the uptrend also weakened quickly.

In the meme coin market, it is hard to rule out a repeat of the same pattern even if another rally emerges. Beyond whether attention turns back to meme coins, a key variable for whether any rise can be sustained is whether volume and participation hold after an initial spike.