AI Concept Meme Coin ACT Experiences Sudden Plunge
Yesterday (1st) around 18:30, the meme coin ACT suddenly experienced a cliff-like drop, with the price plummeting from around $0.19 to a low of $0.0843 in just half an hour, a decline of over 55%! What exactly happened?
(Background: Market maker Wintermute made substantial profits trading meme coins, often at the expense of retail investors? 67% of the tokens handled have dropped, with SOL performing worse than ETH.)
(Further context: Binance’s public disclosure of “Meme Coin Learning Notes” reveals investment philosophies: Meme attention becomes faith, and only then do products have the potential to become the next DOGE.)
As of the time of writing, the price has not stabilized and continues to fluctuate downwards, currently reported at $0.0748. What exactly transpired?
Why Did ACT Experience a Plunge? Did Market Maker Wintermute Abandon the Token?
We know that during this bullish market, the well-known market maker Wintermute accurately seized the meme coin craze and participated in the market-making activities of several tokens, profiting greatly, including ACT. Therefore, when ACT’s price plummeted yesterday, the community’s first thought was whether Wintermute was maliciously manipulating the price. Apart from ACT, several other meme coins that Wintermute participated in also experienced drops, at one point dominating Binance’s list of biggest losers. Thus, some speculate that due to the recent low investment sentiment towards meme coins, multiple token prices have severely depreciated, leading the market maker to possibly abandon tokens like ACT, directly selling off large holdings, which caused the price to crash.
However, in response to the community’s speculation and doubts, Wintermute’s founder and CEO Evgeny Gaevoy quickly clarified in interactions with community members that the company did not play a significant role in ACT’s drop, stating that they only engaged in arbitrage after the token’s price experienced violent fluctuations, and he himself is also monitoring the situation.
Binance’s Adjustment of ACT Contract Leverage and Margin Levels as the Main Cause
If it wasn’t the market maker Wintermute, what caused ACT’s drastic drop? Subsequent investigations revealed that the root of the plunge may be attributed to Binance’s adjustments to the leverage and margin levels for ACT contracts.
According to an announcement made by Binance yesterday afternoon, they stated that on April 1, 2025, at 18:30 Taiwan time, they would adjust the perpetual contract leverage and margin levels for tokens including 1000SATSUSDT, ACTUSDT, PNUTUSDT, NEOUSDT, NEOUSDC, TURBOUSDT, and MEWUSDTU.
So why would this impact the price? Through various analyses from traders @CnmdRain and @BensonTWN, I have summarized the causal chain as follows:
Firstly, during this adjustment, Binance lowered the leverage multiples and position limits for tokens like ACT;
This adjustment significantly impacts market makers and large contract holders. For market makers, while holding spot positions, they typically rely on high leverage and large positions to maintain market liquidity and profit from price differences;
After this adjustment, if the large contract positions held by market makers and whales do not meet Binance’s latest limits, they must either choose to reduce positions or close them, or they will be forcibly liquidated by Binance;
Since Binance’s announcement was made around 15:40 yesterday afternoon and took effect at 18:30, the reaction time for market makers and whales was limited, leading to many positions being forcibly liquidated by the system, especially long positions, which caused the first wave of impact on the spot price;
Simultaneously, once long positions in the contract market start being liquidated, it results in the prices in the contract trading being sold off, while the spot prices do not catch up in the short term, creating a price disparity between the contract and spot markets; in response to this disparity, although it usually occurs over a short period, trading bots often capture it for arbitrage, with the specific arbitrage strategy being — buying low in the contract market while selling in the spot market, resulting in a large amount of spot being sold off, further driving down the spot price;
Under the dual influence of contract and spot prices, this continuously suppresses the price, leading to ACT’s sharp decline in a short time.
He Yi: Investigation Underway
Although this plunge appears to be the result of multiple market forces, some believe Binance should bear primary responsibility, as the exchange could theoretically have predicted this outcome in advance and could have issued warnings to give the market sufficient time to react, thereby preventing the occurrence of drastic fluctuations.
In response to community inquiries, Binance co-founder He Yi also replied on the X platform yesterday that the team is investigating the matter and will provide detailed results in the future, suggesting that Binance should not be blamed:
“The corresponding team is pulling details together for a response. Is it possible that there are other players involved?”
Binance Releases Preliminary Investigation
Just around 1 AM today (2nd), Binance officially released a preliminary investigation stating:
Three VIP users sold ACT tokens worth approximately 514,000 USDT on Binance’s spot market,
One non-VIP user transferred a large amount of ACT to their account and then sold ACT worth about 540,000 USDT on Binance’s spot market.
The drop in ACT price led to some users’ futures positions being liquidated, resulting in the decline of other low market cap tokens. We are currently further investigating the reasons for the rejection of other tokens.
So far, we have not discovered any account profiting from this incident. Since the supply of ACT tokens has fully circulated in the secondary market, Binance cannot restrict or intervene in users’ selling behaviors. But rest assured, we will continue to investigate this incident, and if there are any new developments, we will provide further updates.
Finally, Binance stated: “In light of recent market volatility, to reduce user risk and protect user rights, Binance will continue to adjust the leverage multiples of different trading pairs based on market conditions. Binance hopes to take this opportunity to remind all users to adopt proper risk management measures when engaging in digital asset trading.”
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