Tom Lee, a Wall Street strategist covering bitcoin and the co-founder of Fundstrat Global Advisors, has recently revealed his contrarian indicator, the Bitcoin Misery Index (BMI), recently hit levels it hadn’t since July of 2016, which indicate “the bear market for Bitcoin likely ended at $3,000.”
Lee, often seen as a permabull, introduced the BMI back in early 2018. The momentum indicator ranges between 0 and 100, and sees bitcoin have its “best 12-month performance” when it drops below 27 (hits misery), and has seen BTC experience various bull runs after hitting said level.
As of April 4, the BMI hit 89, its “highest reading since June 2016,” which to Tom Le bring both good and bad news. This, as bitcoin’s BMI has only surpassed 67 since 2011 during bull markets, and as there’s usually a correction of about 25% after hitting its peak.
The Bitcoin Misery Index reached 89 on 4/2. Highest reading since June 2016. Means good and bad.
Good–> Since 2011, BMI >67 only seen during $BTC bull markets. More evidence bull starting.
Bad –> BMI >67 after peak, $BTC falls ~25% = Profit taking ST.#bitcoinmiseryindex pic.twitter.com/X55q2ypiCA
— Thomas Lee (@fundstrat) April 11, 2019
The indicator measures bitcoin’s momentum based on its price and trading activity, incorporating the percentage of winning trades within it. Although the indicator wasn’t created to predict bitcoin’s price, it seems to be pointing towards an incoming correction.
Tom Lee’s conclusion, taking the indicator into account, is that the “BMI reaching 67 is further evidence the bear market for Bitcoin likely ended at $3,000.”
2/ The main takeway is that BMI reaching 67 is further evidence the bear market for Bitcoin likely ended at $3,000
— Thomas Lee (@fundstrat) April 11, 2019
Last year, Lee predicted BTC’s price would reach $25,000 before 2019, but is prediction didn’t come true. In fact, the flagship cryptocurrency fell to a $3,200 low in December, at about the same time the Wall Street analyst claimed the market was wrong about bitcoin.
In February, Lee revealed he believes the “fair value” of the flagship cryptocurrency was a “lot higher” than the price it was currently trading at. Since then, BTC has reached a high of little over $5,000, and is currently trading at $5,090 according to CryptoCompare data.