Lee, who had predicted on May 7th, as covered here on CryptoGlobe, that Bitcoin (BTC) price would rally as a result of the Consensus 2018 conference in New York City, was first asked why this rally had not yet materialized and what had gone wrong. He mainly blamed the growing sentiment during last week that regulatory clarity would take longer than people had expected.
He also said that although there was some good news on the custodial front (such as investment bank Nomura getting involved) and more institutions were getting interested in getting into the crypto space, it would take some more time before internal evangelism within institutions would grow sufficiently for them to wholeheartedly buy into cryptocurrencies.
The discussion then moved to Lee’s Bitcoin Misery Index, which he had introduced to the world on 9 March 2018. This index, which is meant to a contrarian indicator (i.e. you should buy when the index is high and sell when it is low), is calculated on a scale from 0 to 100. It measures sentiment towards Bitcoin by examining data such as price volatility and percentage of winning trades. Lee tried to explain the index in this way: “Think of this index as a way to measure how happy or sad you are owning bitcoin.”
On the 9 March 2018, the index was at 18.8, which sounds pretty miserable, and Lee confirmed this value is “telling us that bitcoin holders are miserable.” According to his report that was published earlier that day, this was a buy signal since “when the bitcoin misery index is at ‘misery’ (below 27), bitcoin sees the best 12-month performance.”
Well, last Friday, 18 May 2018, the index was at 30, which means that people are less miserable than they were on 9 March 2018. The host of the show asked Lee if he was still sticking to his forecast of the Bitcoin price reaching $25,000 before the end of 2018. He replied “absolutely” and went on to explain why:
“We have to keep in mind that Bitcoin at $8,000 and Bitcoin, let's say we think it can reach $25,000, it does not require Bitcoin to go up everyday till the end of the year. Remember, the ten best days account for all the return of Bitcoin. If you didn't own Bitcoin for ten days each year, you lost 25% a year since 2010. So, clearly, Bitcoin is something where only a handful of days account for the gain. So, I think it's really good news that the Bitcoin Misery Index, which had dropped to 18, which was awful, a month ago, is now back to 30. It is acting more consistently, but it is, among the 16 currencies we watch, the worst cryptocurrency on the misery index level. So, EOS is the highest, and Bitcoin is the lowest.”