Price Drops of AI Tokens on Binance Perpetual Futures Market

AI tokens such as ai16z and Venice Token (VVV) have seen significant declines in value since being listed on Binance’s perpetual futures market.

• ai16z: Starting at $2.42 on January 2, it has plummeted by over 84%, now valued at $0.38.
• VVV: Valued at over $18 at the end of January, it has decreased by 67%, currently trading at $5.82.

In early January, Binance introduced perpetual futures for ai16z, linked to a DAO rebranded as ElizaOS, and later launched VVV, which serves as the native token of the AskVenice AI platform. These listings have sparked concerns regarding their impact on price volatility.

Ilya Paveliev, founding partner of Arete Capital, stated, “Binance’s perpetual futures listings have become a death trap for many popular recent tokens, from ai16z to vine.” He criticized the market for creating an environment that encourages aggressive short selling instead of promoting healthy price discovery.

Unlike spot markets, perpetual futures markets give traders the ability to sway prices with minimal capital. While spot prices are driven by genuine buying interest, perpetual futures allow significant price manipulation by major players. Paveliev indicated that market makers often withdraw after a token’s listing, contributing to dramatic price declines.

He emphasized that launching perpetual futures for low-liquidity tokens amplifies price volatility, benefiting short-term traders over long-term investors. He criticized Binance’s approach, claiming it prioritizes hype surrounding AI and meme trends over fundamental stability, ultimately leaving retail investors vulnerable.

Paveliev addressed a broader issue related to centralized exchange listings, suggesting that tokens are frequently subjected to aggressive trade strategies that overlook long-term viability.

Binance was approached for comments on these issues but did not respond before publication.