AI-focused cryptocurrencies ai16z and Venice Token (VVV ($5.27)) have suffered significant price declines since their inclusion in Binance’s perpetual futures market, raising concerns about the impact of derivatives trading on emerging digital assets.
ai16z is down over 84% from its peak price of $2.42 on January 2 and currently trades at just $0.38. Similarly, VVV, which was valued at over $18 at the end of January, is down 67% and is currently trading around $5.82.
Graph showing the decline in VVV.In early January, Binance introduced perpetual futures for ai16z, which the associated decentralized autonomous organization (DAO ($1.96)) has since rebranded as ElizaOS. Later that month, the exchange listed perpetual futures for VVV, the native token of the AskVenice AI infrastructure platform.
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“Binance’s perpetual futures listings have become a death trap for many recently launched tokens, from ai16z to vine,” Arete Capital co-founder Ilya Paveliev said in a statement. “Instead of encouraging healthy price discovery, these listings create an easy path for investors to aggressively short tokens while offloading their spot holdings.”
Unlike spot markets, perpetual futures allow investors to make significant market impact with relatively little capital. While spot prices reflect organic buying demand, perpetual futures can allow large investors to manipulate prices downward, according to Paveliev. “Market makers who are supposed to ensure stability often back away after listing and let prices fall,” he added.
Paveliev argued that offering perpetual futures for tokens with low liquidity exacerbates price volatility and favors short-term traders over long-term holders. “Binance Alpha’s model prioritizes hype over fundamentals by following AI and memecoin trends, leaving retail investors vulnerable,” he said.
*This was not investment advice.
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