Table of Contents
- Market Dynamics
- Analysis of the ACT Flash Crash Incident
- Event Summary: From Rule Adjustments to Market Collapse
- Who is to Blame?
- Binance’s Response
- What Can Investors Learn?
- Binance Followed Orders Analysis
- GTRadar – BULL
- GTRadar – BALANCE
- GTRadar – Potential Public Chain OKX
- Focus News
Market Dynamics
At the end of March, U.S. stocks experienced a significant drop, triggering panic in the market, which nearly caused a thousand-point decline in the Taiwan Weighted Index on that day. Meanwhile, gold continued to reach historical highs, reflecting a peak in market risk aversion. Global investors were focused on the details of Trump’s “Reciprocal Tariff” plan to be announced at 4 PM Eastern Time on April 2. This policy not only relates to global trade trends but also influences the current market direction.
On the news front, the information released by the White House was inconsistent: on one hand, it stated that a 25% high tariff would be imposed on imported cars with no exemptions, while on the other hand, it claimed that countries could apply for lower tax rates through certain measures, causing significant market volatility. BlackRock pointed out that due to the unpredictability of Trump’s policies, concerns about an economic recession have reached a peak.
The cryptocurrency market also saw a correlated correction; however, unlike U.S. stocks, most mainstream cryptocurrencies experienced a mild rebound after Bitcoin stabilized. Yet, the altcoin market faced significant adjustments following the recent ACT crash incident, indicating that aside from a few mainstream coins, the liquidity of most altcoins is extremely poor. The true value of ‘zombie coins’ in the market will eventually be revealed, as shown by the continuous decline in market capitalization of newly listed coins, indicating that investors are reassessing the value of these coins.
The trading environment in March was extremely challenging, lacking a narrative and with heightened risk aversion. However, will the market see a turning point in April? Potential factors that may drive a reversal in the cryptocurrency market include:
– The landing of U.S. federal and state Bitcoin strategic reserves details
– Circle’s anticipated application for listing this month
– Progress on stablecoin legislation
– The Federal Reserve’s reduction of QT scale starting in April, easing capital pressure
These potential positive factors could become key catalysts for a market reversal.
In the past two weeks, Bitcoin has formed a converging triangle consolidation structure and successfully broke upward at the beginning of April. As shown in the chart, the price repeatedly found support at the red upward trend line (yellow arrows), especially after the last retest at the end of March, where trading volume significantly increased, indicating a clear intent from bullish funds to enter the market.
Technically, the price has successfully stabilized above the previous resistance area (around $82,000) and has broken through the downward trend line. In the short term, it is expected to challenge the resistance range of $88,000 to $89,000. If it can break through this range with increased volume, subsequent rebound targets could reach $92,000.
However, the trading volume has not continued to increase. If momentum cannot be sustained going forward, Bitcoin may still retest support around the defensive line of $83,000 to $82,000. Overall, the structure seems to indicate that a bottom has been formed, entering the initial stage of a consolidation upward.
On April 1, 2025, the cryptocurrency market experienced a shocking flash crash, with several low-market-cap tokens, led by ACT, halving in price within just half an hour, with declines ranging from 20% to 55%. This sudden drop not only caused significant losses for investors but also exposed the vulnerabilities of exchange risk control mechanisms, market maker strategies, and the meme coin ecosystem. Binance attributed the incident to “whale sell-offs,” but based on market data, timelines, and the responses of related parties, this storm cannot be explained by a single factor; rather, it is a systemic crisis interwoven with multiple factors.
The starting point of everything was at 15:32 on April 1, when Binance announced adjustments to leverage and margin tiers for several U.S. dollar-denominated perpetual contracts, including ACT. Such adjustments are not uncommon and are intended to limit the risks of high-leverage trading and protect market stability. For example, the contract position limit for ACT was reduced from $4.5 million to $3.5 million, meaning that the maximum position size that investors could hold was reduced. If excess positions were not adjusted in time, the system would forcibly liquidate at market price when the adjustments took effect at 18:30.
As expected, 18:30 became a turning point. The price of ACT plummeted from $0.1899 to $0.0836, a drop of up to 55%, while tokens such as TST, HIPPO, and DEXE also experienced declines of 20% to 50%. CoinGlass data showed that the open interest for ACT contracts dropped over 75% at the same time, and other tokens affected by the adjustments showed similar situations.
This series of price crashes and evaporating positions demonstrated an instantaneous depletion of market liquidity, triggering panic selling and a cascading effect.
The truth behind this flash crash is not simple and involves multiple games between exchanges, market makers, and the market itself.
1. The exchange underestimated the impact of risk control measures.
Binance’s rule adjustment appeared to be routine risk management, but the timing and execution ignited a market minefield. The adjusted position limit directly impacted high-leverage players, particularly market makers and whales, who typically rely on large positions to maintain liquidity and spread profits. When the system’s forced liquidation was activated, a massive influx of sell orders poured into the contract market, causing prices to collapse first, which then affected the spot market, leading to a chain reaction. Some in the community believe this was Binance’s attempt to guard against the whale manipulation risks recently faced by Hyperliquid, but the result was counterproductive, prematurely igniting a potential crisis.
2. Wintermute’s sell-off suspicions.
Wintermute, as a market maker for ACT, drew considerable attention during the incident. After the plunge, on-chain data showed it withdrew and sold ACT and other meme coins from Binance, leading the community to speculate that this downturn was deliberately instigated by Wintermute. However, we believe that as a market maker, conducting off-chain and on-chain arbitrage during market volatility is reasonable behavior. Furthermore, with Binance recently cracking down on malicious actions by market makers, Wintermute had no reason to break the law or jeopardize its reputation by doing so. Nevertheless, it cannot be denied that Wintermute’s sale of ACT may have exacerbated market panic, indirectly triggering further market declines.
3. The inherent fragility of meme coins.
The crash of low-market-cap meme coins like ACT was not coincidental but rather stemmed from the widespread issues of insufficient liquidity and weak value support among low-market-cap tokens. These tokens often rely on community enthusiasm and speculative sentiment for propulsion. Once they encounter external shocks (such as rule adjustments or whale sell-offs), the trading depth cannot bear the selling pressure, resulting in prices plummeting like a cliff. If the same conditions were applied to more liquid tokens like DOGE, TON, or LINK, such a severe reaction would certainly not occur.
After the incident, Binance quickly released a report stating that the ACT crash was due to the sell-off of approximately $1.05 million in spot tokens by three VIP users and one non-VIP user, denying that the rule adjustments were the primary cause.
However, this claim is difficult to convince the community. Firstly, the evaporation of 75% of the ACT contract open interest does not match the scale of the spot sell-off, indicating that the forced liquidation in the contract market was the initial trigger. Secondly, the simultaneous decline of multiple tokens is difficult to explain solely by the sell-off of individual whales; it resembles a chain reaction triggered by rule adjustments.
This incident left investors with a painful lesson. Many investors, even with stop-losses set, were unable to close positions due to the rapid decline, ultimately incurring losses far exceeding expectations. Overall, Binance’s risk control intentions may have aimed to protect the market but inadvertently exposed the fragility of the cryptocurrency ecosystem; the actions of market makers exacerbated the chaos, while the inherent defects of meme coins became the last straw that broke the camel’s back. In this market dominated by institutions, whales, and algorithms, retail investors often can only passively endure volatility. In the future, as regulation strengthens and the market matures, such incidents may decrease; however, until then, maintaining vigilance and investing rationally is key to survival.
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