ACT Coin Plunges 50% Amid Bullish Market, Sparking Speculation of Algorithmic Squeeze
Despite a generally bullish market on April 1st, several altcoins listed on Binance unexpectedly plummeted. Leading the crash was the memecoin Solana ACT, losing nearly 50% within minutes. Other tokens such as DeXe, dForce, KAVA, HIPPO, BANANAS31, LUMIA, TST, and QUICK also experienced double-digit drops without clear explanation.
Binance Margin Adjustments and ACT’s Collapse
One possible explanation revolves around Binance’s announcement of margin adjustments for six altcoins, including ACT. This decision, though relatively unnoticed, may have triggered an inverse leveraged effect on certain assets. However, this hypothesis fails to explain why only ACT experienced such a drastic drop, while the other tokens remained relatively stable, leaving the mystery unresolved.
Market Makers Under Suspicion
Various theories have emerged on social media, with some suggesting a sudden squeeze caused by the new margin conditions of ACT, which possibly trapped a market maker. In this scenario, an algorithmic trading bot would have been forced to liquidate massive positions to contain losses, resulting in a domino effect on other low liquidity tokens. Supporting this theory, analyst The OnchainData Nerd cites data from Arkham alleging that market maker Wintermute sold a significant quantity of ACT tokens just before the crash.
The Demise of a Popular Memecoin
ACT recently represented the fusion of memecoin euphoria and enthusiasm for artificial intelligence. Launched on Solana, the project promised an interactive gamified ecosystem bridging humans and bots together. At its peak, ACT reached a market capitalization of $890 million and became one of the few AI memecoins listed on Binance. Presently, its capital has plummeted by over 85%, weighing in at only $95 million. This dramatic fall illustrates the vulnerability of a sector where network effects and liquidity can reverse within minutes.
A Warning for Leveraged Traders
This incident once again highlights the vulnerability of low-cap altcoins, especially when exposed to leveraged derivatives. In such a volatile environment, a simple margin adjustment can trigger a chain of brutal liquidations. Without transparency regarding the positions of market makers and the algorithms at play, markets remain vulnerable to sudden and challenging-to-predict events, even in the face of an overall bullish market.
Another strange episode in this peculiar period concerning Binance and the once-respected memecoins listed on its platform.
