The Dreadful Plunge into Fear
The Crypto Fear and Greed Index has taken a nosedive into ‘fear’ territory, a sentiment state that hasn’t been seen since the chaos of March 11. Cast your minds back to the time when Circle’s USD coin (USDC) flirted briefly with losing its dollar-peg. Well, grab your emotional support crypto, because here we are again.
SEC vs. Binance: A Legal Tussle
The recent upheaval was triggered on June 5 when the United States Securities and Exchange Commission (SEC) decided to file a lawsuit against Binance, its U.S. arm, and its CEO, Changpeng Zhao. Talk about a triple threat! The SEC brought a whopping 13 charges against the exchange, claiming it’s been playing the market like a kid with a toy truck in a candy store—failing to register as a securities exchange and allegedly operating illegally on American soil.
How the Index Works
The Fear and Greed Index is like a mood ring for the crypto market, aggregating a mix of indicators to reflect investor sentiments. It takes into account price volatility, momentum, trading volume, the buzz on social media, and even Google trends. In essence, it’s a high-tech gossip tracker, giving us a peek into the emotional rollercoaster of cryptocurrency traders.
Indicators of Mood Swings
- Price volatility: High swings can represent fear or greed.
- Market momentum: Indicates the direction of the price trends.
- Trading volume: High trade numbers may suggest heightened emotions.
- Social media chatter: Trends and sentiments shared online.
The Aftermath: How Crypto is Reacting
With the SEC’s lawsuit stirring the pot, it’s no wonder that cryptocurrencies didn’t take the news lying down. Bitcoin is down by 4.1% and Ether (ETH) has plummeted by 3.1% in the past 24 hours. Meanwhile, the altcoins are having their own crisis; Cardano (ADA) has dropped by 6.4% and Solana (SOL) took a nose-dive of 7.4%.
Liquidations: The Big Cleanup
Traders who had open positions in the crypto derivatives markets are feeling the burn. Since the announcement, more than $280 million worth of liquidations have hit the market. The majority? Traders who were riding the “long” wave—hoping the tides would rise—accounted for approximately 92% of these losses, totaling a staggering $261.75 million. Guess what? They are now regretting their overly optimistic bets.
Is Anything Safe?
The top two digital assets, Bitcoin and Ether, were responsible for around 43% of these losses, leaving many wondering if any crypto is safe from the SEC’s looming presence. Those short-traders? They only got a relative ‘friendly fire’ of $20.7 million in liquidations.
