Recent events in the crypto market have led to significant fluctuations, with liquidations totaling $957 million and the fear and greed index hitting a record low.
Sharp Decline in Fear and Greed Index
The Fear and Greed Index, provided by Alternative, dropped to 24 points, the lowest level since September last year, indicating an 'extreme fear' state in the market. This sharp drop followed wider market sell-offs, as Bitcoin fell below $93,000, shifting from a neutral level of 49 to an extreme fear level.
Decrease in Open Interest and Liquidations
According to Coinglass data, the market slump resulted in $957.85 million in liquidations, with $886.47 million from long positions. At the same time, Open Interest declined by 5% to $108 billion, signaling reduced risk tolerance. The surge in liquidations highlights previously overconfident expectations, which intensified sell-offs in response to macroeconomic volatility.
Other Factors and Market Events
The recent $1.4 billion hack of a prominent cryptocurrency exchange, one of the biggest hacks ever, also negatively impacted market sentiment. Despite the exchange's success in recovering losses, market concerns about security persist. Analysts note that the market response remains more calculated compared to the FTX collapse in 2022, indicating a maturing market.
The current slump in the crypto market, driven by liquidations and macroeconomic factors, underscores its vulnerability and the need to adapt to changes.
