What is Bitcoin Misery Index?
Thomas Lee, a Wall Street Analyst and the co-founder of Fundstrat Global Advisors has developed a new Bitcoin Index called “Misery Index” which suggests when to buy Bitcoins.
Just like other sentiment indicators, the Bitcoin Misery Index is an adversary meter. When the meter index is low, investors can buy bitcoins and vice-versa. The Bitcoin Misery Index considers factors such as volatility and number of winning trades from the cumulative total while suggesting when to buy bitcoins.
This report comes at a time when the market dynamics of Bitcoin have been displaying considerable signs of wear and tear. Since its high on Monday, the Bitcoin price has plummeted down by 24% following a slew of negative reports which have increased regulatory scrutiny and raised concerns amongst its advocators.
“When the bitcoin misery index is at ‘misery’ (below 27), bitcoin sees the best 12-month performance.”
According to a report published by Lee, the the Misery Index is at 18.8 which is the lowest since September 6, 2011, which means it is a good time to buy Bitcoins. Lee says:
“Think of this index as a way to measure how happy or sad you are owning bitcoin.”
Lee revealed during the “Fast Money” segment of CNBC on Friday that, the current index reading is “telling us that bitcoin holders are miserable,” right now.
However, Lee said that, “the last four times this was below 27…there was not a single instance with bitcoin not up 12 months later,” while hinting at the fact that in spite of being a signal of pain, it might pave the gate way for mass entry in the long run.
In spite of being 800% higher than its 12-month back figure, the price of bitcoin has reduced by more than 50% since its record highs of $19000 in mid-December. Lee said that, “It is really uncommon to be this miserable owning bitcoin,” by citing reference of Nov. 2012, Sept. 2016 and Jan. 2015 when similar incidents took shape last time. He also revealed that, ” bitcoin was higher a month later. [The index] is telling us, it’s really tough to own it for the next week or even two weeks, three weeks. But we’re getting through this.” This major Wall Street strategist issues formal price targets and regular reports on bitcoin. Before co-founding Fundstrat, he served as the chief equity strategist at J.P Morgan Chase.Lee had set a mid-year bitcoin price target of $20000 and year-end target of $25000. He signed off saying that:
“The BMI is telling us to keep the negative headlines in perspective. When the BMI is at a ‘misery’ level, future returns are very good.”
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Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.