Key takeaways:
Binance’s new “Meme Rush” launchpad aims for fair launches but has led to a sell-off as traders wait for fresh offerings.
A single wallet held substantial token amounts, raising manipulation concerns and causing significant price drops.
Low liquidity and exaggerated trading volumes intensified the memecoin sell-off within the BNB Chain ecosystem.
Numerous BNB Chain memecoins saw declines exceeding 30% on Thursday following impressive gains earlier in the week. This sell-off coincided with BNB (BNB) experiencing its first-ever $100 single-day price decrease, dropping to $1,246 at the time of this report. Is this the conclusion of the BNB Chain memecoin craze — and were there any warnings before this decline?
Most affected memecoins had market caps below $50 million, although some, like PALU, GIGGLE, 4, and Binance Life (币安人生), distinguished themselves amid the downturn. Analysts suggest that sentiment shifted after Binance revealed its new platform, Meme Rush, on Thursday, in collaboration with Four.Meme available solely for Binance Wallet users.
Meme Rush not only follows the standard bonding curve model with listings on DEXs after reaching a $1 million fully diluted valuation but also introduces potential offerings on Binance Alpha, ensuring new tokens are accessible to all Binance users. This initiative is designed to mitigate false trading volumes through KYC protocols and fair-launch mechanisms, though it has attracted some criticism.
X user henloitsjoyce remarked that “degen” products like memecoin launchpads don’t align with the performance goals or key metrics of centralized exchanges. Perhaps the main driver of memecoins’ success lies in their minimal regulation and oversight. Nevertheless, traders likely liquidated existing BNB Chain memecoins while anticipating a shift to the newly announced platform.
BNB Chain memecoins affected by high concentration and artificial volumes
Even with profit-taking and the desire to rotate investments before the next memecoin launch wave, additional factors were needed to precipitate a 40% drop in mere hours. Significant concentration among top wallets, fairly low liquidity, and artificially inflated trading volumes likely fueled this sharp downturn in the BNB meme season.
X user StarPlatinumSOL indicated that a single wallet controlled nearly 39% of PALU’s supply at its peak, along with 23% of Binance Life (币安人生) and 14% of 4. Additionally, one wallet purportedly executed batched transactions exceeding $100,000 across several tokens, suggesting potential artificial trading volumes. The user also pointed out that some memecoins had under 2.5% of their total supply lodged in liquidity pools.
Unlike traditional bid-and-offer order books, most DEXs function through automated market makers reliant on liquidity pools, a challenge not exclusive to BNB Chain. When a limited portion of a token’s supply is reserved in liquidity, inflows can drastically inflate market capitalization; however, this same structure precipitates price crashes as sell orders grow more intense.
Related: How Aster, Lighter and Hyperliquid are vying for the next era of on-chain trading
More troublingly, the X account Bubblemaps observed that a single wallet acquired approximately $100,000 worth of PALU just moments before former Binance co-founder Changpeng “CZ” Zhao shared an image featuring the memecoin’s logo. The timing stirred speculation regarding coordinated trading actions. Bubblemaps further noted that “insiders” held an unusually high percentage of particular projects, such as YEPE, where insiders seemingly managed about 60% of the supply.
The fact that BNB itself fell 9.5% from its $1,357 all-time high on Tuesday further fueled the correction throughout the memecoin market. Ultimately, the sustainability of the BNB Chain memecoin season may hinge on whether BNB can regain the $1,300 mark and whether Binance Wallet’s launchpad initiative proves successful.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
