On Tuesday, Binance saw a sudden and dramatic drop in the prices of several crypto tokens, including Act I, the Prophecy (ACT), which plummeted 50%, DeXe (DEXE), which dropped 30%, and dForce (DF), which fell nearly 20%. These sharp declines occurred within just 30 minutes after 10:31 UTC, leaving many traders wondering if a malfunctioning trading bot was to blame for the price action.
According to Binance data, the large price movements occurred without any clear fundamental catalyst, leading to speculation that an automated trading system might have caused the market imbalance. The drop triggered $6.28 million worth of liquidations on ACT futures, with one trader alone losing $3.2 million. Several other tokens, such as HIPPO, BANANA31, TST, and LUMIA, experienced similar declines, though they were not as severe as ACT. Interestingly, tokens like KAVA experienced some rebound as quick traders took advantage of the dip.
The sudden sell-off appeared to be linked to a surge in trading volumes on the affected tokens, with no similar spikes seen across the broader Binance market. This anomaly came shortly after Binance’s announcement at 10:30 UTC regarding changes to the leverage and margin tiers for perpetual contracts, including ACT/USDT. These new rules, which applied to existing positions, likely prompted algorithmic trading bots to adjust their positions, causing significant price volatility in perpetual contracts. This volatility eventually spread to spot markets as well.
The sharp downturn in prices was not limited to Binance alone, as other centralized and decentralized exchanges experienced similar drops in the affected tokens. In response, traders speculated that the rapid price fluctuations could have been caused by a misconfiguration in market-making bots, leading to excessive sell-offs in a short period. Some industry observers pointed out that this could have been exacerbated by traders using cross-margin setups or engaging in arbitrage strategies, who were forced to liquidate both their positions as the prices fell.
While the exact cause of the market turbulence remains unclear, social media reactions ranged from surprise to skepticism about a possible hack or bot malfunction. Despite the chatter, no evidence has surfaced to confirm the suspicions, leaving the crypto community to grapple with the volatility triggered by a combination of automated trading and shifting exchange policies.
