AI-focused cryptocurrencies have experienced a sharp decline following their introduction to Binance’s perpetual futures market. The move has reignited concerns about the impact of derivatives trading on smaller digital assets.
Severe Losses for AI Tokens
Ai16z: This token reached a high of $2.42 in early January but has since plummeted by more than 84%, now trading at just $0.38.
Venice Token (VVV): VVV saw a similar drop, falling from $18 in late January to around $5.82, marking a 67% decline.
The downturn accelerated after Binance launched perpetual futures for Ai16z, just before its affiliated DAO rebranded as ElizaOS. Shortly after, Binance introduced similar futures for VVV, the token behind the AskVenice AI ecosystem.
The Impact of Perpetual Futures
Some market analysts have pointed to the role of perpetual futures in exacerbating the decline. Ilya Paveliev, co-founder of Arete Capital, believes these derivatives have become a tool for aggressive short-selling rather than supporting organic price growth. He argues that traders use futures to drive prices lower while offloading their spot holdings.
Unlike traditional spot trading, perpetual futures allow traders to exert significant influence on market trends with relatively little capital. Paveliev suggests that this environment enables large investors to push prices down, while market makers—who usually help stabilize markets—withdraw their support once a listing is active.
Binance’s Approach Under Scrutiny
Paveliev also criticized Binance for what he sees as an emphasis on hype-driven narratives, such as AI and meme coins, instead of focusing on the fundamentals of the tokens. By listing perpetual futures for tokens with limited liquidity, he claims Binance amplifies volatility, putting retail investors at greater risk.
As the AI token market continues to struggle, the influence of derivative trading and Binance’s approach to listing tokens remain points of contention in the industry.
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