Against the background of an abrupt Bitcoin price downfall, the Bitcoin Fear & Greed Index, which tracks sentiment among investors, has dropped to 12 yesterday and just slightly recovered to 24, thus indicating extreme concern.
The index takes into account factors such as volatility, market dynamics, trading volumes, social media trends, various research data, and BTC dominance index.
Notably, this drastic market downfall comes ahead of the expiration date of Bitcoin options on Deribit and LedgerX, as well as the settlement date of Bitcoin futures on CME.
According to findings from Arcane Research, from January 2018 to August 2019, the Bitcoin price used to fall before settlement dates for futures contracts 75% of the time. The Bitcoin price falls, on average, 2% ahead of futures contracts being settled on CME, in comparison to the 0.06% average on a random day over the same period. This may be caused either by cautious investors’ eagerness to close positions in order to avoid extreme volatility, or by possible market manipulation.