Listings and delistings from the world's largest cryptocurrency exchange can trigger substantial volatility. Earlier today, November 3, Binance terminated certain trading services involving three altcoins, resulting in major price declines for the affected assets.
The Binance Effect on Altcoin Prices
According to an official announcement, Binance Futures will close all positions and conduct an automatic settlement on the KDA/USDT perpetual contract on November 6. A day later, the exchange will perform the same action for the AXS/USD and THETA/USD contracts. The company advised users to close any existing positions prior to the delisting period and noted that clients are not allowed to open new positions for these specific products.
“In order to protect users and prevent potential risks in extremely volatile market conditions, Binance Futures may undertake additional protective measures toward the aforementioned contracts without further announcement, including but not limited to adjusting the maximum leverage value, position value, and maintenance margin in each margin tier, updating funding rates, such as the interest rate, premium and capped funding rate, changing the constituents of the price index, and using the Last Price Protected mechanism to update the Mark Price,” the disclosure reads.
Following the news, Kadena (KDA) experienced a sharp decline, dropping to as low as $0.03, representing a 22% collapse on a daily scale. Axie Infinity (AXS) and Theta Network (THETA) also saw significant retracements, falling by 9% and 8%, respectively.
Historical Impact of Binance Delistings
Price dumps are often most severe when Binance terminates all trading services with a particular cryptocurrency. This pattern was observed last week when the exchange revealed it would delist Kadena (KDA), Flamingo (FLM), and Perpetual Protocol (PERP). KDA once again bore the brunt of the impact, with its price sinking by approximately 30%.
Such delisting efforts reduce the liquidity and visibility of the affected coins, potentially causing reputational damage. Conversely, support from Binance typically has the opposite effect and often acts as a catalyst for price appreciation.
For instance, in September, the firm introduced the STBL/USDT perpetual contract with up to 50x leverage, and the asset's valuation subsequently exploded by 500%. Shortly after, it launched the FLUID/USDT perpetual contract with up to 75x leverage, which was followed by a 55% rally for FLUID.