Following the surge in memecoin activity in the BNB chain, Binance founder Changpeng Zhao (CZ) sent a clear warning to the community, stating that permanence of the BSC chain could be the cause of high risk and volatility. His remarks coincided with a surge in activity around BNB Smart Chain (BSC) meme coins, where speculation is escalating rapidly.
Tokens based on the BNB chain are currently trading at up to 25 times the leverage. The speculative cycle before a rapid increase followed by a similarly rapid correction is somewhat similar to the current trend of rising memecoin.
BSC’s PERPS. High risk, high volatile. https://t.co/olscbgghvc
– CZ
Market participants face significant risks as a result of increased activity, even when giving the liquidity and visibility of the BNB chain. Scalming price fluctuations are inevitable in this environment, as newly issued meme assets are subject to permanent contracts with high leverage. Unprepared traders may experience significant liquidation and quickly erase profits with this level of volatility. As the CZ warning highlights, users need to be careful.
The current surge is based primarily on speculative hype, not fundamental value, despite the fact that BNB chains are gaining from increased trading volume and engagement. Assets associated with this trend may experience a steep decline if emotions change or liquidity contracts change. From a network perspective, BSC’s market presence can be improved due to the growing popularity of leveraged products and meme coins.
However, the reliability and assessment of BNB itself can be weakened when these trends become unsustainable or create systematic risks. There are high reward opportunities related to current meme coin frenzy at BSC, but there are also high risks. As CZ suggested, this area is not for beginners. Traders need to balance the risk of sudden market reversals and volatile price action against the potential for profit.
