Crypto sentiment index dips back to March ‘fear’ levels amid Binance lawsuit

The Crypto Fear and Greed Index, a tool that gauges the sentiment of the Bitcoin and cryptocurrency markets, has dropped to a level of “fear” not seen since March 11th when Circle’s USD coin (USDC) temporarily lost its dollar-pegged value.

The decline in market sentiment on June 5 is the result of the United States Securities and Exchange Commission filing a legal action against Binance, its U.S. division and its CEO, Changpeng Zhao.

The Securities and Exchange Commission brought a total of 13 charges against the exchange and its related entities for not registering as a securities exchange and unlawfully operating in the United States.

The index is created by combining various indicators to measure market sentiment. It incorporates metrics such as price volatility, momentum, trading volume, along with data from social media and Google trends, to form an overall view of investors’ feelings towards Bitcoin and the cryptocurrency market as a whole.

The SEC’s latest action against Binance has caused the value of major cryptocurrencies such as Bitcoin and Ether to drop significantly in the last 24 hours, with a 4.1% decrease for Bitcoin and a 3.1% decrease for Ether, as reported by the Cointelegraph Price Index. This has resulted in a negative sentiment in the market.

The other large cryptocurrencies also suffered losses. At the time of writing, Cardano (ADA) had dropped by 6.4% in the last 24 hours, while Solana (SOL) had declined by 7.4%.

The SEC’s complaint may shed light on why Brian Brooks stepped down as Binance.US CEO.

Traders who had open positions in crypto derivatives markets were adversely affected, with over $280 million in liquidations taking place since the lawsuit was declared.

Traders who had taken out “long” positions – a bet that the price of crypto assets would go up – were the most affected, making up 92% of the total liquidations, amounting to $261.75 million. Short traders, on the other hand, experienced liquidations of $20.7 million. The two leading digital assets were responsible for almost half of these losses.

The Yuan stablecoin team has been arrested, WeChat has released new Bitcoin prices, and Hong Kong has issued regulations regarding cryptocurrencies.