Key takeaways:
The new “Meme Rush” launchpad from Binance aims to ensure fair launches, but it has caused a sell-off as traders wait for upcoming releases.
A single wallet held a significant amount of tokens, raising concerns over market manipulation and causing substantial price drops.
Low liquidity combined with inflated trading volumes exacerbated the memecoin sell-off across the BNB Chain ecosystem.
Several BNB Chain memecoins plummeted over 30% on Thursday after experiencing notable gains earlier in the week. This sell-off coincided with BNB (BNB) recording its first-ever $100 single-day price decline, falling to $1,246 at the time of writing. Is this the end of the BNB Chain memecoin hype, and were there any warning signs prior to the downturn?
Most of the impacted memecoins had market caps below $50 million, although a few gained attention during the decline, such as PALU, GIGGLE, 4, and Binance Life (币安人生). Some analysts believe that the mood shifted after Binance introduced its new platform, Meme Rush, on Thursday, a collaboration with Four.Meme exclusive to Binance Wallet users.
Meme Rush goes beyond the typical bonding curve model and listings on DEXs once a $1 million fully diluted valuation is reached, also introducing potential listings on Binance Alpha, thus allowing the entire Binance user base access to new tokens. The initiative seeks to eliminate fake trading volumes through KYC requirements and fair-launch procedures, despite receiving some criticism.
X user henloitsjoyce contended that “degen” products such as memecoin launchpads do not align with the performance objectives or key metrics of centralized exchanges. Perhaps the true factor behind memecoins’ popularity is their lack of regulation and oversight. However, traders likely sold off existing BNB Chain memecoins in anticipation of switching to the newly announced platform.
BNB Chain memecoins affected by high concentration and fake volumes
Even with profit-taking and a desire to shift capital ahead of the next wave of memecoin launches, additional factors were necessary to prompt a 40% drop within a few hours. High concentration among major wallets, comparatively low liquidity, and artificially inflated volumes likely contributed to the sharp decline during the BNB meme season.
X user StarPlatinumSOL reported that a single wallet held nearly 39% of PALU’s supply at its peak, alongside 23% of Binance Life (币安人生) and 14% of 4. Additionally, one wallet allegedly executed large transactions of $100,000 or more across multiple tokens, hinting at possible fake trading volumes. The user further pointed out that some memecoins had less than 2.5% of their total supply deposited in liquidity pools.
Unlike standard bid-and-offer order books, most DEXs function through automated market makers based on liquidity pools, a challenge that isn’t exclusive to BNB Chain. When only a minimal part of a token’s supply is locked in liquidity, inflows can dramatically inflate market cap, but the same mechanism also exacerbates price crashes when sell orders surge.
Related: How Aster, Lighter, and Hyperliquid are vying for the next era of on-chain trading
Moreover, X account Bubblemaps noted that a single wallet acquired around $100,000 worth of PALU just minutes before former Binance co-founder Changpeng “CZ” Zhao shared an image featuring the memecoin’s logo. This timing spurred speculation regarding coordinated trading activity. Bubblemaps also reported that “insiders” possessed an unusually high percentage of certain projects, such as YEPE, where insiders allegedly held about 60% of the supply.
The fact that BNB itself fell 9.5% from its $1,357 all-time high on Tuesday further accelerated the correction throughout the memecoin market. Ultimately, the endurance of the BNB Chain memecoin phase may hinge on whether BNB can regain the $1,300 level and if Binance Wallet’s launchpad initiative proves successful.
This article is for informational purposes only and should not be viewed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
