The Crypto Fear and Greed Index is currently at a level of “fear” not seen since March 11th, when the value of Circle’s USD coin (USDC) briefly dropped below its dollar-peg. This drop in market sentiment on June 5th is a result of the United States Securities and Exchange Commission filing a lawsuit against Binance, its U.S. arm, and CEO Changpeng Zhao. The SEC has charged the exchange and its affiliates with 13 counts of failing to register as a securities exchange and operating illegally within the U.S.
The Fear and Greed Index combines various indicators, such as price volatility, momentum, trading volume, social media, and Google trends, to give an overall indication of investor sentiment towards Bitcoin and the wider crypto market. The negative sentiment of investors is mainly due to the sharp decline in the value of cryptocurrencies following the SEC’s lawsuit filed against Binance. According to Cointelegraph Price Index, blue-chip crypto assets such as Bitcoin and Ether (ETH) have decreased by 4.1% and 3.1%, respectively, over the past 24 hours. Large altcoins such as Cardano (ADA) and Solana (SOL) experienced losses of 6.4% and 7.4%, respectively.
Traders who had open positions on crypto derivatives markets have suffered losses, with more than $280 million worth of liquidations occurring since the announcement of the lawsuit. Unsurprisingly, traders with open “long” positions (a leveraged bet on the price of crypto assets increasing) were the hardest hit, accounting for $261.75 million (92%) of the overall liquidations. Meanwhile, short traders experienced $20.7 million in liquidations. Both Bitcoin and Ether were responsible for around 43% of these losses.
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