The Crypto Fear and Greed Index — a tool that measures broad market sentiment toward Bitcoin and the broader crypto market — has dipped to a level of “fear” since March 11 of this year, when Circle’s USD coin (USDC) briefly lost ground to the dollar. – Pin.
The dip in market sentiment comes in the wake of the United States Securities and Exchange Commission (SEC) filing a lawsuit against its US operations arm and CEO Changpeng Zhao.
The SEC brought a total of 13 charges against the exchange and its affiliates for failing to register as a securities exchange and operating illegally in the United States.
The index works by aggregating a mix of indicators to gauge market sentiment. Metrics including price volatility, momentum, and trading volume are combined with data from social media and Google Trends to form an overall picture of investor sentiment toward Bitcoin and the broader crypto market.
Much of the negative sentiment is owed to the sudden drop in the value of cryptocurrencies following the SEC’s latest move against Binance. Blue-chip crypto assets such as Bitcoin and Ethereum (ETH) have fallen 4.1% and 3.1% respectively in the past 24 hours, according to data from the Cointelegraph Price Index.
Major altcoins also took a hit. At the time of publication, Cardano (ADA) is down 6.4% while Solana (SOL) is down 7.4% in the last 24 hours.
Related: SEC Complaint Hints at Why Binance.US CEO Brian Brooks Resigned
Traders with open positions in the crypto derivatives markets also suffered consequences, with more than $280 million worth of liquidations occurring since the lawsuit was announced.
Unsurprisingly, traders with open “long” positions — a leveraged bet on rising prices of crypto assets — were hit the hardest, accounting for $261.75 million (92%) in total liquidations. Meanwhile, small merchants experienced $20.7 million in liquidations. The top two digital assets are responsible for around 43% of this loss.
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