Key takeaways:
Binance’s new “Meme Rush” launchpad encourages fair launches but sparked a sell-off as traders await upcoming launches.
A single wallet controlled significant token amounts, raising manipulation concerns and causing sharp price drops.
Low liquidity and inflated trading volumes exacerbated the memecoin sell-off across the BNB Chain ecosystem.
Many BNB Chain memecoins fell over 30% on Thursday following substantial gains earlier in the week. The sell-off coincided with BNB (BNB) experiencing its first-ever $100 drop in a single day, reaching $1,246 at the time of writing. Is this the end of the BNB Chain memecoin frenzy — and were there any warning signs before the crash?
Most affected memecoins had market caps below $50 million, though some notable exceptions included PALU, GIGGLE, 4, and Binance Life (币安人生). Analysts speculate that sentiment shifted after Binance’s announcement of its new platform, Meme Rush, on Thursday, in partnership with Four.Meme, available exclusively for Binance Wallet users.
In addition to the standard bonding curve model and listings on DEXs after reaching a $1 million fully diluted valuation, Meme Rush offers potential listings on Binance Alpha, allowing all Binance users access to new tokens. This initiative aims to mitigate fake trading volumes through KYC requirements and fair-launch mechanisms, though it has received 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. The real success of memecoins may stem from their lack of regulation and oversight. However, traders likely sold off existing BNB Chain memecoins in anticipation of transitioning to the newly announced platform.
BNB Chain memecoins affected by high concentration and fake volumes
Even with profit-taking and the inclination to rotate capital ahead of the next batch of memecoin launches, additional factors contributed to a rapid 40% decline in just a few hours. High concentration among top wallets, low liquidity, and artificially inflated volumes were likely primary drivers behind the swift downturn in the BNB meme season.
X user StarPlatinumSOL reported 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. This wallet also executed batched transactions of $100,000 or more across multiple tokens, suggesting potential fake trading volumes. Additionally, some memecoins reportedly had less than 2.5% of their total supply locked in liquidity pools.
Unlike traditional bid-and-ask order books, most DEXs use automated market makers based on liquidity pools, presenting a challenge not unique to BNB Chain. When only a small portion of a token’s supply is locked in liquidity, inflows can dramatically inflate market capitalization, but this same structure can trigger severe price drops when sell orders increase.
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Worryingly, X account Bubblemaps noted that a single wallet purchased about $100,000 worth of PALU shortly before former Binance co-founder Changpeng “CZ” Zhao shared an image featuring the memecoin’s logo. The timing raised suspicions about coordinated trading actions. Bubblemaps also pointed out that “insiders” held an unusually large portion of specific projects, like YEPE, where insiders allegedly controlled around 60% of the supply.
The fact that BNB itself dropped 9.5% from its $1,357 all-time high on Tuesday further fueled the correction across the memecoin market. Ultimately, the viability of the BNB Chain memecoin season may hinge on whether BNB can regain the $1,300 level and if Binance Wallet’s launchpad initiative is 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.
