A recent Binance update has caused massive liquidations and a steep correction for Solana memecoin ACT. Initially, market maker Wintermute was blamed for the declines, but it appears that Binance’s update to leverage and margin tiers is the real culprit. Several altcoins listed on Binance experienced significant drops, with Solana memecoin ACT plummeting over 50% in just 30 minutes. Other altcoins like DEXE and DF also saw steep declines, leaving traders puzzled. The consensus is that large sell orders were the cause of the sudden price slumps.
The sudden drops were attributed to large sell orders executed in a short period, resulting in a surge in spot trading volume. While some initially pointed fingers at market maker Wintermute, CEO Evgeny Gaevoy denied responsibility, stating that the market maker reacted after the move. This decline occurred amidst a broader market recovery, with some cryptocurrencies like Compound (COMP) gaining as much as 70%. The trigger for the 50% decline in Solana memecoin ACT was traced back to a Binance update on leverage and margin tiers for specific tokens, including ACT.
Binance announced changes to the margin tiers of several perpetual contracts, affecting existing positions. This update led to the liquidation of a large ACT whale for $3.79 million at $0.1877, sparking a widespread selloff. Former FTX community manager Benson Sun criticized Binance for the sudden change, noting that traders had less than three hours to respond. He suggested that Binance should have notified market makers with large positions in advance. Following the listing of memecoin MUBARAK, its price dropped by 40%, prompting Binance CEO Changpeng Zhao to downplay the impact of listings on prices.
Binance has faced criticism recently for excluding Pi Network from its Vote To List initiative. In conclusion, the recent corrections in the altcoin market, specifically affecting Solana memecoin ACT, were caused by a combination of large sell orders and Binance’s update to leverage and margin tiers. Traders were caught off guard by the sudden drops, leading to significant losses for some. Moving forward, it is important for exchanges to communicate changes to market participants in a timely and transparent manner to avoid such drastic price swings. As the market continues to evolve, staying informed and vigilant is crucial for navigating the volatility of the cryptocurrency space.
