Binance Founder Warns About Meme Coin Risks on BNB Chain

Following the surge of meme coin activity on BNB Chain, Binance founder Changpeng Zhao (CZ) has issued a warning regarding the high risk and volatility associated with perpetuals on the BSC chain. His caution comes as meme coin activity escalates on the BNB Smart Chain (BSC).

Tokens on the BNB Chain are being traded with leverage of up to 25x. This mirrors previous speculative cycles marked by rapid price increases followed by swift corrections, resembling the current trend involving meme coins.

> CZ on Twitter:
> “Perps on BSC. High risk, high volatility. link
> — CZ 🔶 BNB (@cz_binance) March 23, 2025

Despite boosting liquidity and visibility on the BNB Chain, this heightened activity poses significant risks for market participants. The environment is characterized by sharp price fluctuations, as newly launched meme assets are engaged in perpetual contracts with high leverage. Unprepared traders could face substantial liquidations, and their profits may vanish rapidly due to volatility. CZ emphasizes the need for caution.

While the BNB Chain benefits from increased trading volume and user engagement, the current surge is primarily driven by speculative hype rather than intrinsic value. This might lead to severe price drops if market sentiment changes or liquidity decreases. Although the rising popularity of leveraged products and meme coins can enhance BSC’s market presence, it could also undermine the credibility and valuation of BNB itself if these trends turn out to be unsustainable.

In conclusion, while there are opportunities for high rewards associated with the ongoing meme coin frenzy on BSC, they come with equally high risks. As CZ advises, this environment is not suitable for novice traders, who must manage the potential for sudden market reversals and volatile price movements against profit possibilities.