Several altcoins, such as ATOM and IOTX, temporarily plummeted to zero on Binance during the recent crypto downturn, although they retained their value on other exchanges.

Key Takeaways

• Certain altcoins, including Cosmos’s ATOM token, saw values near zero on Binance during the Friday crypto crash.
• In contrast, these altcoins held significant values on other centralized exchanges.

On October 10, the crypto market faced its steepest decline since the FTX collapse, with a market cap vaporizing by around $850 billion in hours. Bitcoin’s value dropped approximately 10–15%, moving from nearly $124,000 to lows around $105,000. However, altcoins suffered greatly, particularly those traded on Binance, as prices fell by 99.99-100% in mere minutes.

These losses involved tokens like Cosmos (ATOM), IoTeX (IOTX), and Enjin (ENJ), whose values briefly reached zero on Binance.

ATOM/USDT, IOTX/USDT, ENJ/USDT chart
ATOM/USDT, IOTX/USDT, and ENJ/USDT one-day chart on Binance. Source: TradingView

In comparison, prices for ATOM dropped by 53% on other exchanges, while IOTX and ENJ decreased by 46% and 64.5%, respectively. Notably, they didn’t encounter zero valuations anywhere else, which was a unique occurrence on Binance.

Reason for the Price Collapse

Nearly $20 billion worth of crypto positions were liquidated during the crash period from October 9 to 10, which was about 20 times greater than what occurred during the March 2020 market downturn. More than 1.6 million traders faced position losses as leverage played a significant role in the panic sell-off.

Many traders adopted leverage on Binance to amplify their profits. Arthur Hayes, co-founder of BitMEX, noted that significant exchanges, including Binance, were ’liquidating collateral tied to cross-margin positions,’ which intensified the selling frenzy.

When prices fell, Binance automatically sold altcoins used as collateral in a bid to cover losses. This further generated selling pressure, leading to more abrupt price reductions. As prices sagged, Binance’s trading system experienced overload. Users reported account freezes, missed stop-loss orders, and delayed transactions.

Simultaneously, some market makers withdrew funds from Binance in response to these complications.

That left a brief void in buy orders, resulting in ‘zero’ prices for certain coins, despite their actual value remaining intact on other platforms.

A similar situation had arisen in 2017 when Ethereum briefly dropped to $0.10 on GDAX.

Binance’s Response

Binance co-founder Yi He issued an apology regarding the issues encountered by some users during the extreme volatility. CEO Richard Teng also expressed regret, stating:

“I’m truly sorry to everyone who was impacted. We don’t make excuses — we listen closely, learn from what happened, and are committed to doing better.”

Binance committed to compensating users with verifiable losses linked to system or platform failures, clarifying that losses stemming from price volatility or unrealized gains would not qualify for compensation.

This article does not constitute investment advice or recommendations. Every investment and trading action carries risks, and readers should perform their own due diligence.