Altcoins Plunge Up To 53% On Binance Amid Position Limit Adjustments

On Tuesday morning, several altcoins experienced a significant drop of up to 50% on the global crypto exchange Binance, causing confusion among investors. Community members speculated that recent adjustments in the exchange’s position limits could be responsible for the incident.

Multiple altcoins, including Solana-based memecoin and AI Agent token Act I: The AI Prophecy (ACT), saw a peculiar start to Q2 after their prices tanked on Binance. ACT, which had a market capitalization of $722 million, had been relatively stable in March, hovering between the $0.18-$0.19 price range. However, in just 30 minutes, ACT crashed from the $0.189 mark to the $0.087 level, registering a 53% fall.

Similarly, other tokens such as DEXE, KAVA, DF, HIPPO, BANANAS31, LUMIA, TST, and QUICK also recorded sudden price drops, losing between 10% and 35% of their value in an hour. The ACT team acknowledged the incident, stating that they were fully aware of the situation and actively investigating the matter in collaboration with relevant parties. They also mentioned developing a response plan with their trusted partners.

Analyst Altcoin Sherpa suggested that a price bounce for ACT seemed likely but noted that investors might realize they do not want to hold the coin, viewing this as a forced rebalance event. Meanwhile, the crypto community speculated that Wintermute, a trading firm, could be responsible for the altcoin massacre, as it reportedly liquidated several of its positions that day. However, Wintermute’s CEO, Evgeny Gaevoy, denied the rumors, stating that the firm was not involved.

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 revealed 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. This led to the cryptocurrency’s price drop, causing some users to close their futures contracts and triggering the decline of other altcoins.

Binance pointed out that they had taken preventive measures to adjust leverage multiples downward. The exchange also mentioned that it had 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. 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.