Bitcoin could be about to bounce in the weeks to come, according to a technical indicator called the Bitcoin Misery Index (BMI) and its creator - Fundstrat' Global Advisors' co-founder Tom Lee, a bitcoin enthusiast.
For those wondering if the Bitcoin Misery Index still is useful. It told us markets would be trendless after July.— Thomas Lee (@fundstrat) September 9, 2019
- we shared this with our clients on July 30th. https://t.co/CWXdz1jD3i
The index is calculated by measuring the number of winning bitcoin trades against the total number of trades and then accounting for volatility. The scale is from zero to 100 and any level below 50 indicates a buy signal.
Indeed, the lower the level of the index, says Lee, the higher the rate of "misery" - which means it is a good time to buy. The higher above 50 it rises, the more "euphoric" investors are becoming and, thus, indicates a sell signal.
Time To Buy?
Lee said on Tuesday that since the stellar performance that culminated in the 18-month highs of June and July, bitcoin has turned flat and the BMI has slowly deflated, but with the index now close to 50 again, some dramatic moves could be on the horizon.
In a Twitter post on Tuesday, Lee said that he was "waiting for the BMI to get to 50 before expecting the next big up move".
The price of bitcoin was languishing, little changed on Tuesday, at around the $10,200 mark. If the next up move is going to take the price to Lee's end-of-year prediction of $40,000, it will need to be a strong buy signal.
Featured picture shows Tom Lee at the CryptoCompare Digital Asset Summit.