On Wednesday, Binance listed perpetual futures tied to the meme token BONK, which has rallied 1,800% in 4 weeks.
The itemizing of perpetuals tied to smaller tokens has traditionally pricked bull runs within the respective cryptocurrencies.
The market capitalization of bonk (BONK), a Solana token that got here into existence as a meme coin in January, has surged over 1,800% up to now 4 weeks, outshining Solana’s SOL token and business chief bitcoin (BTC) by a big margin.
The nice occasions, nonetheless, is likely to be over. On Wednesday, Binance listed perpetual contracts tied to the token with 50x leverage. Traditionally, a choice by the alternate to listing perpetual contracts tied to smaller tokens has marked main worth tops for the related cryptocurrencies.
Perpetuals are futures contracts with no expiry date, permitting buyers to take a position on the worth of an underlying asset whereas bypassing the bodily settlement of products concerned in customary futures contracts. In addition they provide better leverage than customary contracts.
Here is an instance: The market capitalization of Pepe memecoin’s (PEPE) surged from almost zero to $1.5 billion within the weeks main as much as the Could 5 itemizing of PEPE perpetual futures on the alternate. The market worth peaked that day, falling to as little as $380 million within the subsequent 4 weeks, Coingecko exhibits.
An analogous sample performed out within the decentralized lending and borrowing platform Hifi’s HIFI token, which greater than tripled within the first half of the month and crashed after Binance listed HIFI perpetuals on Sept. 16.
Maybe the arrival of perpetual futures noticed skeptics and bears specific their bearish views on the rallying cryptocurrency, pricking the worth bubble. Perpetuals enable merchants to brief or take bearish bets on the cryptocurrency extra simply than within the spot market.
BONK could also be following an identical course. The token’s market cap has already pulled again from $327 million to $257 million up to now 24 hours, Coingecko knowledge present.
“Now, it isn’t assured to work (nothing is), but when historical past had been our information, the chance of this transpiring is kind of excessive. That stated, solely time will inform!,” Priyansh Patel, analyst at Delphi, wrote to shoppers Wednesday, noting the phenomenon.
Patel added that SOL’s rally has been halted after it just lately reached $68 and that could possibly be another excuse to fret for BONK bulls.
“Seeing how BONK has just about mirrored SOL’s worth motion, it wouldn’t be unreasonable to imagine that this continues and BONK produces some sideways worth motion if not corrective,” Patel stated.
On Wednesday, Binance additionally listed perpetuals for Pyth Community’s PYTH token, which has rallied 64% this week.