The recent rally of meme coins on the BNB Chain has come to a sudden stop, with many tokens plunging drastically in value over the past 24 hours. This sharp downturn followed a statement from Binance founder Changpeng “CZ” Zhao, clarifying that his social media posts should not be taken as trading signals or endorsements.
In response to a warning from trader YazanXBT about the risks associated with naming tokens after CZ or sending coins to his wallet, Zhao emphasized that his tweets are not endorsements. This clarification triggered a sell-off across BNB Chain’s leading decentralized exchange, PancakeSwap, where many of these meme coins are traded.
Over 100,000 traders had participated in the BNB meme coin frenzy earlier in the week, with the majority showing profits at the peak of the rally. However, as the market took a nosedive, many tokens lost a significant portion of their value within hours. One trader reportedly made over $10 million, while others saw substantial gains in the early stages of the meme craze.
PancakeSwap, the decentralized exchange on BNB Chain, saw record-breaking trading volumes in September and the first nine days of October. However, as liquidity dried up and traders rushed to exit their positions, popular coins like $HODL, $SAFU, $BROCCOLI, and $PUP suffered losses between 80% and 95%.
The sell-off also impacted Chinese-themed tokens that had surged during the meme rally, with coins like 币安人生 (Binance Life) and PALU experiencing significant drops in market value. Some traders who heavily invested in these now-struggling tokens are facing substantial unrealized losses.
Analysts have noted that the market was also hit by rug pulls, where tokens disappear after collecting liquidity from buyers. The collapse of tokens like HODL highlights the risks associated with short-lived meme coins built on hype rather than intrinsic value.
The sustainability of the meme coin market has been called into question following the swift reversal of fortunes. The “BNB Meme Szn” frenzy, which began after BNB Chain’s official X account was briefly hacked, saw the creation of over 35,000 new tokens in 24 hours. At its peak, the market capitalization reached $2.1 billion before plummeting to $1.3 billion after the crash.
Despite the market turmoil, BNB, the native token of BNB Chain, has only slipped 2% in value over the past 24 hours. The decline in BNB’s price comes as memecoin trades on the network unwind, despite record-high on-chain activity. BNB Chain recorded 5 trillion gas used in a single day, driven by 24 million swap transactions.
While BNB experienced a correction following a month-long rally that lifted its value by 45%, analysts remain optimistic about its medium-term outlook. The network’s growing usage, including the adoption of a standard 0.05 Gwei gas fee, has made on-chain activity faster and cheaper. If buying momentum returns at key retracement zones, BNB could resume its uptrend towards new highs later this quarter.
In conclusion, the recent crash of BNB meme coins serves as a stark reminder of the risks associated with speculative investments in the cryptocurrency market. Traders and investors are urged to exercise caution and conduct thorough research before participating in meme coin frenzies to avoid significant losses.