This GameFi Token Plummeted 50% in 24 Hours, Here’s Why

This GameFi Token Plummeted 50% in 24 Hours, Here's Why

On the 4th of December, 2022, the Lookonchain account on Twitter announced that BNX lost more than 50% of its value within 24 hours. Here’s why.

Within 24 hours, three wallets holding BNX tokens from a staking pool, removed the liquidity on the assets from PancakeSwap, then transferred these assets to Binance, where it was put on sale. The value of the assets at the time was $1.9 million.

Due to the similarities and timing of the transactions, it’s believed that one person or group owned the accounts and were in collaboration. This action resulted in the first price drop from $125 to $93, and this caused a cascading effect in the BNX market.

BNX is the native token of BinaryX, which is currently an investment of Binance Labs. It is a GameFi ecosystem, and as a player, one can create characters for gameplay, collect various assets, and go on adventures. The end game is to win against the Cyber Dragon. And those that are successful can get immense rewards.

And with the initial price drop of the BNX tokens, other players holding the token decided to offload theirs, too, resulting in the price gliding to the bottom. But that wasn’t enough to drop the price drastically until a whale removed $1.2 million worth of BNX from a BUSD liquidity pool on PancakeSwap, and offloaded them in Binance.

This led to two things. One, a major price drop to around $51. Two, an investigation into their tokenomics and it led to an interesting discovery. Just 30 wallets hold 98% of all BNX tokens in circulation, which are currently worth around $400 million.

Since BNX is an investment of Binance Labs, and it’s built on the BNB chain, around $157 million worth of the assets is on Binance. The BNX token is usually used for in-game purchases and DAO governance and is the native currency for the whole GameFi ecosystem. So this should give the BNX some value, better distribution, and some resistance. So there is speculation that more is afoot.

The final strange fact is BNX’s behavior during the FTX crash. Almost every single asset was affected by the crash of the second-largest crypto exchange in the world. Yet BNX was surprisingly insulated from that, which had people believing that market makers control the price.

Alternatively, BNX probably doesn’t have any demand, which led to a sharp nose dive in price.

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