On Tuesday, a significant drop in the prices of several tokens on Binance sparked concerns of a potential trading bot malfunction. Act I, the Prophecy (ACT) dropped 50%, DeXe (DEXE) fell by 30%, and dForce (DF) saw a nearly 20% decline, all within just 30 minutes after 10:31 UTC, according to Binance’s data. The sudden price crashes caught many off guard, as no clear catalyst was identified for the dramatic movements, leading some to speculate that a misconfigured trading bot could have been responsible.
The unexpected downturn caused a cascade of liquidations, with $6.28 million worth of long positions being liquidated across exchanges in ACT-tracked futures, including a single $3.2 million liquidation. Other tokens such as HIPPO, BANANA31, TST, and LUMIA also experienced similar declines shortly after 11:00 UTC, though not as severe as ACT. Despite this, some tokens like KAVA saw quick buy-ups by active traders, dampening further losses.
The sell-offs appeared to coincide with a surge in trading volume across the affected tokens, but interestingly, no other tokens on Binance saw similar increases in sell activity. Market observers believe the volatility might have been triggered by Binance’s announcement earlier at 10:30 UTC, which introduced new leverage requirements and margin tiers for perpetual contracts, including the ACT/USDT pair. These changes were applied to existing positions, which could have prompted automated trading bots to make adjustments, causing a ripple effect in the market.
The sharp declines spread across multiple exchanges, affecting both centralized and decentralized platforms, and leading to speculation about the role of misconfigured bots in exacerbating the market downturn. Some traders suggested that the issue might have been related to market-making bots that failed to adjust properly to Binance’s updated margin rules, triggering the rapid price movements.
Traders on social media quickly weighed in, with some suggesting that the price drops could be the result of liquidations tied to algorithmic trading strategies that reacted to the margin changes, which led to panic and more sell-offs. Despite the speculations, no concrete evidence of bot malfunctions or hacks has been confirmed. The event highlighted the continued vulnerability of crypto markets to rapid shifts in automated trading behavior, especially when coupled with changes in exchange policies.
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