16 mins ago |
By Jamie Redman – |
The Bitcoin Misery Index: Finding An Entry Way With Sadness
This week the Wall Street analyst and Fundstrat executive, Tom Lee, has revealed a new index that helps cryptocurrency investors know the right time to buy BTC. The indicator is called the ‘Bitcoin Misery Index’ that calculates multiple market factors.
The ‘Bitcoin Misery Index’
Fundstrat advisor Tom Lee is well known for being a big believer in cryptocurrencies and has made several correct BTC price predictions last year. Lee predicted that BTC/USD markets would rally past the $10K mark as well as outperform traditional assets by the end of the year. Even though crypto-markets have been suffering from a bearish town turn over the long run Lee is still bullish.
Lee has created a ‘Bitcoin Misery Index’ that is calculated on a scale of 0-100, and right now the index is at 18.8, the lowest it’s been since 2011 according to Lee in an interview with the broadcast Fast Money. A misery index is a method of using contrarian economic indicators and was created by the economist Arthur Okun. Lee’s misery index takes into account a variety of BTC market factors including winning trades and volatility.
“Think of this index as a way to measure how happy or sad you are owning bitcoin,” Lee explains.
When the Bitcoin Misery Index is at ‘misery’ (below 27), bitcoin sees the best 12-month performance.
$20,000 By Mid-Year 2018
According to Lee when the misery index is low, it’s a good time for investors to acquire more bitcoin investing in a more contrarian manner. “While short-term the low points are a signal of pain, long term it could be a great entry way into bitcoin,” Lee details. “The last four times this was below 27…there was not a single instance with bitcoin not up 12 months later.”
“It is really uncommon to be this miserable owning bitcoin, The last few times this happened was in November 2012, September 2016 and January 2015,” Lee emphasizes.
And 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. 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.
The Fundstrat advisor still firmly believes his prediction made a few weeks prior that by the middle of the year bitcoin will be once again around $20K and possibly $25,000 by year-end.