Around 1:30 PM today, many altcoins on cryptocurrency exchange Binance experienced sudden and sharp declines, with ACT/USDT down over 49% in 30 minutes, DEXE/USDT down over 23%, and DF/USDT down over 16% in the same period.
The unexpected decline was triggered by large sell orders executed within a short time frame, leading to a significant increase in spot trading volume.
Benson Sun, a former FTX community partner, analyzed the situation and attributed the price crash to Binance’s recent adjustments to ACT’s leverage position limits. The platform had introduced a rule that limited maximum open positions at 1x leverage to $4.5 million. According to the analyst, some market makers had positions exceeding this limit, which led to automatic liquidations in the market prices. The forced sale caused the contract price to fall, creating a large disparity between futures and spot prices, which in turn pushed the spot price down.
Sun also noted that Binance announced this leverage adjustment at 10:32 AM on April 1st and that it would be implemented at 1:30 PM on the same day, giving traders less than three hours to react. Notably, Binance made a similar adjustment on March 31st and reduced position limits by another 50% for lower leverage levels on April 1st.
*This is not investment advice.
