The “bitcoin misery index” is a tool that was developed by Wall Street strategist Thomas Lee. The misery index has now indicated that this is an excellent time to purchase Bitcoin. This was according to CNBC. At the moment, Thomas Lee has still not altered his midyear price target of $20,000 while the end year price target for the flagship digital currency still remains $25,000.
Lee, who is the co-founder of Fundstrat Global Advisors during an interview with CNBC on Friday on their show “Fast Money” stated that anytime the bitcoin misery index falls below 27, then the currency sees its 12.month performance. He added that the signal only occurs once a year.
Lowest Misery Index since September 2011
As of today, the misery index stands at a low of 18.8 on a scale of 100. This current position makes it the lowest it has experienced since Sept. 6, 2011. Lee added that the misery index is a measure of how happy or sad you are holding bitcoin.
When the index is low, it is a sign for investors to buy. When the index gets high, then the investors should sell. The index also shows the number of winning trades from the total trades while also accounting for bitcoin’s volatility.
Last week, the price of bitcoin fell by 24% from its Monday high after reports emerged about an increased regulatory scrutiny for the crypto market.
The low misery index is an indication of pain, even though it represents short-term signals. Lee stated that on long-term, the low points could point out to investors the best time to invest in bitcoin.
Lee stated that the last four times the bitcoin misery index fell below 27, it always rises within 12 months.
Last week was a tough one for bitcoin. Binance announced that some accounts might have been compromised. At the same time, the U.S SEC revealed that it will be increasing its scrutiny of cryptocurrency wallets and exchanges. Following that, Japan suspended two exchanges for a month and called for five other to improve or face some consequences.
On Wednesday last week, it was also reported that the trustee of the now-defunct Mt. Gox exchange has sold roughly $400 million worth of bitcoin and Bitcoin Cash.
Bitcoin has rebounded a bit though this week as it now trades above the $9,500 market. Since attaining its all-time high of $19,000 in December, the currency has shed more than 50% of its market value.
Lee added that it is very uncommon to be this unhappy holding bitcoin. He stated that the last periods such an event occurred were November of 2012, September of 2016 and January of 2015. In each of the cases, bitcoin soared higher in the following month.
Hold on for a Week to Three
Lee advised people to hold on to their bitcoin for the next one or two or three weeks. According to him, that is the message the index is trying to pass.