Yesterday Evening, ACT Plummets Over 50% in Just a Few Minutes, Triggering Market Chain Reactions
Last night, ACT plunged over 50% in the span of just a few minutes, causing a chain reaction in the market. Although initial blame was directed at the market maker Wintermute, investigations revealed that the real trigger was Binance’s sudden adjustments to its contract leverage and margin system, leading to forced liquidations and panic selling among large holders.
Multi-Currency Flash Crash, ACT Takes the Brunt
Last night, ACT fell over 50% in the perpetual contract market on Binance, making it the biggest victim of this adjustment. Other tokens like DEXE and DF also saw sharp declines of 23% and 16%, respectively.
— Cobie (@cobie) April 1, 2025
On the X platform, many traders initially blamed the large sell-off on Wintermute’s market-making activities, but the company’s CEO Evgeny Gaevoy quickly denied this, stating that their selling action was a passive response to the price drop.
Wintermute Address Dynamics
(Why do market makers or Binance often appear at short-term peaks? Wintermute’s CEO discusses key aspects of market-making.)
The Real Culprit: Sudden Changes to Binance’s Contract Rules, Double Whammy of Liquidations and Arbitrage Bots
Trader @CnmdRain pointed out that the leverage multiples and margin levels for multiple tokens, including ACT on Binance, were suddenly lowered yesterday, directly affecting existing positions. What sparked further controversy was that this change was announced less than three hours in advance, leaving traders and market makers who rely on high leverage with almost no room to react.
He indicated that the price drop of ACT was primarily due to forced liquidations following the rule changes, resulting in $27 million worth of sell orders in a short time. Among them, a whale holding ACT was liquidated for a position worth $3.79 million, indirectly triggering a series of sell-offs:
The price collapse simultaneously led to a price discrepancy between contracts and spot markets, attracting arbitrage bots to enter the market, buying contracts at low prices and selling spots at high prices, exacerbating the selling pressure in the spot market and worsening the price decline.
Former FTX community manager Benson Sun bluntly stated: “Before changing the rules, Binance should assess how many positions would be affected and notify market makers with large positions in advance.”
Large Holders Exit in a Panic Sell-off
In a subsequent investigation report, Binance stated that this phenomenon was due to three VIP users collectively selling $510,000 in a short time, along with another non-VIP user selling $540,000, causing significant volatility in a market with lower liquidity.
However, the media outlet “Fangchengshi News” disagreed, pointing out that the report only examined trading data from the spot market, while the massive sell-off was actually triggered by the perpetual contract market. They noted that several ACT whales had maintained high positions in the contract market over the past few months, intending to push up prices but chose to surrender and sell off under the dual pressure of no buyers and sudden rule changes:
In order to reduce overall losses, large holders opted to dump their positions all at once to attract liquidity from buyers, rather than adopting the TWAP strategy of gradually liquidating to prevent other short sellers from escaping first.
DWF Labs Seeks to Ride the Wave: Willing to Provide Support to Affected Projects
In response, another infamous market maker, DWF Labs founder @ag_dwf, stated that the synchronous plunge of multiple unrelated tokens was quite “unusual,” and promised to provide financial support to help affected projects return to their former state:
“If your project has been impacted by this odd occurrence, please contact us. We will allocate funds for buybacks and create recovery plans for your tokens.”
Colin Wu, editor-in-chief of “Wu Says Blockchain,” pointed out that since Binance tightened restrictions on proactive market makers, the market may lose some liquidity support, amplifying the vulnerability of small-cap tokens, making similar flash crash events a potential norm.
This morning, there were indeed significant short-term declines in tokens like MASK, LEVER, and KAVA, raising concerns about whether there would be another wave of crashes.
Cryptocurrency Market Structure Under Test Again
The flash crash of ACT reflects the profound impact of leverage systems on market stability, highlighting that policy changes without buffering and communication can easily trigger market chain reactions. For exchanges, transparency and risk control mechanisms will be key to gaining market trust in the future.
Risk Warning
Investing in cryptocurrencies carries a high level of risk, and their prices can fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.