Wall Street Strategist Creates “Bitcoin Misery Index”, Which Signals Its Time to Buy

Francisco Memoria
  • TA Wall Street strategist created a "Bitcoin Misery Index" that signals when to buy bitcoin
  • The index is currently at the lowest it's been since September 2011, signaling its a time to buy

Bitcoin bull Tom Lee, the only Wall Street strategist covering Bitcoin and the co-founder of Fundstrat Global Advisors, recently created a “Bitcoin Misery Index.” The index works like most sentiment indicators, and is meant to be a contrarian one. This means that when it’s low, it’s time to buy the cryptocurrency. The index ranges from 0 to 100, and is now at 18.8.

According to Tom Lee, when the misery index hits “misery” (falls below 27), bitcoin sees “the best 12-month performance.” In the past, bitcoin has experienced several bull runs after falling below the 27 mark. Its current value of 18.8 is the lowest it’s been since September 6, 2011.

The Bitcoin Misery Index takes into account several factors. Among them are the number of winning trades out of the total, and the cryptocurrency’s volatility, according to Tom Lee. He said:

“The BMI [Bitcoin Misery Index] is telling us to keep the negative headlines in perspective. When the BMI is at a 'misery' level, future returns are very good."

Tom Lee

Lee’s report and new misery index come at a rough time for bitcoin and the cryptocurrency ecosystem in general. One of the biggest cryptocurrency exchanges, Binance, just faced hacking rumors while it thwarted a ‘large scale’ theft attempt. Japan’s Financial Services Agency (FSA) suspended two cryptocurrency exchanges for one month, as the result of poor security and compliance standards.

Moreover, Mt Gox trustee Nobuaki Kobayashi revealed he has sold roughly 35,800 BTC and 38,000 BCH, which roughly equals $405 million taking into account the dates in which these coins were sold. Kobayashi is still in possession of about 160,000 BTC, and further liquidations could be coming.

In light of these events, bitcoin’s price has been declining in the past few days. At press time, the flagship cryptocurrency is down by 3 percent, and is currently trading at $8,800, according to data from CryptoCompare.

Speaking to Barron’s, Tom Lee revealed that the Mt Gox liquidation, depending on tis magnitude, could be painful in the short term, but not a deal breaker. To the Wall Street strategist, some of the money bitcoin is being sold for will end up coming back.

In his report, Lee maintained his $20,000 mid-year bitcoin price target, and his $25,000 year-end target.

Bitcoin Won't Hit $100,000 in the Next Bull Run, Analysts Predict

Francisco Memoria

Two popular cryptocurrency analysts have weighed in on the price of the flagship cryptocurrency bitcoin and made it clear they believe BTC won’t hit $100,000 in the next bull run.

In an episode of “Trading Bitcoin,” Tone Vays and the pseudonymous trader Filbfilb debated the cryptocurrency’s price performance and the current state of the market. Both analysts agreed that the cryptocurrency has to break specific targets in the near future to keep moving up, with Vays pointing to $10,450 and Filbfilb pointing to $11,500.

CryptoCompare data shows that bitcoin’s price hit a high of $10,480 this month but was quickly rejected off of that zone, dropping to a $9,460 low before it started recovering again. At press time, one bitcoin is trading at $9,700.

bitcoin price chartSource: CryptoCompare

Both analysts also dug into the next bull run Bitcoin is going to go through. They agreed hype surrounding Bitcoin’s halving event, which will cut block rewards in half to 6.25 BTC per block, is fueling price action so far this year.

Bitcoin has been through two halving events so far and its price surged after both, as the supply of new BTC entering the market drops while demand has kept on growing. Some believe the cryptocurrency could hit $100,000 over the halving event, but both Vays and Filbfilb seemed to believe this is an overly bullish prediction.

Instead, Vays said he’s looking for BTC to hit a $45,000 high, while Filbfilb argued the $60,000 mark would be a crucial one. He said:

I think we’re going to struggle to get past $60,000. I think $60,000 is going to be a really, really troublesome level to get across. I’ll certainly be looking to book in some serious profits at that point.

As CryptoGlobe reported various industry personalities have been making notable price predictions over the last few weeks. Max Keiser, who claims to have predicted BTC would hit $100,000 in 2012, changed his prediction to $400,000.

Thomas Lee, co-founder, managing partner, and head of research at the research boutique Fundstrat Global Advisors, claimed in an interview he believes bitcoin could see an almost 100X increase in price if it got to five million users.

Featured image via Unsplash.