Market Shock: Tokens Plummet in Minutes
On Tuesday, several crypto tokens experienced a dramatic decline of up to 50% within just 30 minutes on the Binance exchange. This alarming drop has left market analysts speculating about the potential involvement of a misconfigured trading bot as the cause behind these sudden losses.
Significant Declines Across Multiple Tokens
Among the hardest hit was Act I, the Prophecy (ACT), which saw a staggering 50% plunge. Other tokens, including DeXe (DEXE) and dForce (DF), also suffered substantial losses, falling by 30% and nearly 20%, respectively. These sharp declines were recorded shortly after 10:31 UTC, with no clear reason or catalyst identified for the abrupt market downturn.
Liquidation Chaos: Millions Lost
The sudden price drop resulted in significant liquidations, with approximately $6.28 million in long positions being wiped out on ACT-tracked futures across various exchanges. One unfortunate trader faced a liquidation of $3.2 million, highlighting the severity of the market’s volatility.
Other Tokens Follow Suit
Following the initial plunge, tokens such as HIPPO, BANANA31, TST, and LUMIA also experienced declines around 11:00 UTC, albeit not as severe as ACT. Meanwhile, some traders quickly capitalized on the dips, purchasing tokens like KAVA as prices fell.
Unusual Selling Volumes and Market Reactions
Interestingly, the tokens that experienced sharp declines were not related or from the same sector. Data revealed a notable surge in selling volumes at the same time, yet other tokens on Binance did not exhibit similar spikes in selling activity. This anomaly raised eyebrows among traders and analysts.
Binance Announcement and Its Implications
The volatility in the market may have been triggered by Binance’s announcement made at 10:30 UTC, which outlined changes to leverage requirements and margin tiers for perpetual contracts, including the ACT/USDT pair. The announcement specified that these new rules would apply to existing positions, likely prompting trading bots to adjust their strategies, leading to the observed price fluctuations in perpetual contracts and subsequently affecting spot prices.
Impact Across Exchanges and Community Speculation
The ripple effect from this trading frenzy extended beyond Binance, with affected tokens showing similar declines on other centralized and decentralized exchanges. Initial reactions on social media platform X ranged from disbelief to theories suggesting that a market-making bot might have malfunctioned, causing the widespread sell-off. As of the time of writing, CoinDesk has been unable to independently verify these claims.
Industry Insights on the Incident
Andrei Grachev, founder of DWF Labs, expressed his confusion on X, saying, “Seems someone has been hacked or banned or idk. Otherwise, I cannot explain why too many unrelated assets dumped.” Another market observer, who remained anonymous, noted that even though the updates were specific to perpetual contracts, the ensuing panic spilled into the spot market. “Traders utilizing cross-margin setups or engaging in arbitrage strategies likely had to unwind both sides. The cascade of panic from perpetual contracts also led both algorithmic traders and discretionary players to exit spot positions to mitigate risk,” they explained.
Ongoing Developments
As the situation evolves, updates and additional details are expected, particularly regarding Binance’s changes to leverage requirements. The crypto community continues to monitor the market closely, seeking answers to the unusual price movements that have unfolded.
