The sudden price drop of ACT and many other Altcoins occurred due to Binance adjusting the leverage position limit of ACT, leading to the closure of excess positions of market makers at market prices, causing a significant value decline.

As Allinstation reported, at 6 PM on April 1st, many small-cap altcoins on Binance suddenly dropped sharply by 20% to 60%, including ACT, DeXe, KAVA, DF, UFT, HIPPO, LUMIA, HMSTR, and QUICK. Among them, ACT experienced the most significant drop of 60%.

Benson Sun, a prominent KOL in the cryptocurrency community and former FTX partner, posted an analysis on social media, revealing important information about this ACT price drop. According to his analysis, at 6 PM on the same day, the price of ACT dropped suddenly by 50%. The main reason for this decline was Binance's adjustment of ACT's leverage position limit. Specifically, Binance updated the maximum allowed position to $4.5 million with a 1x leverage ratio. Previously, some market makers had opened positions exceeding this limit and could not maintain them, resulting in excess positions being closed directly at the current market price.

After the ACT contract experienced a sharp price drop, there was a significant difference between the contract price and the spot price, causing the spot price to also decline dramatically, creating an unpredictable "flash crash".

Notably, Binance issued a notice at 3 PM on April 1st, declaring that these changes would take effect at 6 PM on the same day, which is less than 3 hours from the time the announcement was made. This was a very short period for users to react and adjust their positions. In fact, Binance had announced the adjustment of ACT's position limit on March 31st, but the important changes related to the low leverage position limit were cut by 50% on April 1st, catching investors and market makers by surprise.

Benson Sun also criticized Binance for not implementing comprehensive and clear notification measures for users about this change. He believed that before changing such regulations, Binance needs to carefully assess the number of positions that could be closed and notify market makers in advance, especially those with large positions. This would not only help users have time to prepare and adjust but also avoid major incidents causing significant damage.