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On Tuesday morning, several altcoins nosedived up to 50% on global crypto exchange Binance, sparking confusion among investors. Several community members shared theories for the incident, speculating that recent adjustments in the exchange’s position limits could be responsible.
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Altcoins See Q2 Opening Crash On Binance
Multiple altcoins saw a peculiar start to Q2 after their price tanked on Binance on Tuesday morning. The crypto community raised the alarm after Solana-based memecoin and AI Agent token Act I: The AI Prophecy (ACT) plunged around 50% in less than an hour.
The cryptocurrency, which once had a market capitalization of $722 million, has moved sideways for most of March, hovering between the $0.18-$0.19 price range until today. In 30 minutes, ACT crashed from the $0.189 mark to the $0.087 level, registering a 53% fall.
Similarly, the DEXE, KAVA, DF, HIPPO, BANANAS31, LUMIA, TST, and QUICK tokens also recorded a sudden price drop, losing between 10% and 35% of their value in an hour.
ACT’s team acknowledged the incident, stating, “Dear ACT community, we want to assure you that we’re fully aware of the current situation. Our team is actively investigating and working collaboratively with all relevant parties to address this matter.” The post also noted they had begun developing a response plan alongside their trusted partners.
Analyst Altcoin Sherpa suggested that a price bounce for ACT seems likely but noted that “ppl might realize that they don’t really want to hold this coin and view this as a forced rebalance event. Nobody buying. Nobody selling.”
No April Fool’s Joke
As Binance posted about a different April Fool’s joke, investors started to speculate what caused the sudden bleeding, with some joking that the prank had gone too far. The crypto community guessed that Wintermute was responsible for the Altcoin massacre, as it reportedly liquidated several of its positions today.
Nonetheless, the trading firm’s CEO, Evgeny Gaevoy, denied the rumors, stating, “Not us fwiw, but also curious about that postmortem.”
Meanwhile, Lookonchain suggested that Binance’s recent update of its leverage and margin tiers on several altcoins, including ACT, could have been the reason for the token crash.
Six hours later, Binance Customer Support replied to Wu Blockchain’s report, revealing that the reason for the dump was that three VIP users cross-sold tokens worth 514,000 USDT in the spot market and a non-VIP user transferred a large amount of ACT from other platforms and sold 540,000 USDT worth of the token in a short period.
As a result, the cryptocurrency’s price dropped, which led some users to close their futures contracts, triggering the decline of other altcoins. The crypto exchange pointed out that they recently took “the initiative to take preventive measures to adjust leverage multiples downward.”
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“Binance Contracts has recently issued consecutive adjustment announcements for the ACTUSDT perpetual contract, during which there was no market movement and no active reduction of any user’s position,” the post detailed.
Binance added that it will continue to investigate the incident and update the relevant details if there is any news, concluding that the crypto market has been volatile recently and asking investors to exercise caution.
Featured Image from Unsplash.com, Chart from TradingView.com
