The Wall Street strategist and co-founder of Fundstrat Global Advisors Thomas Lee has created a”contrarian index” that lets investors know how”miserable” Bitcoin (BTC) owners are based on current prices, reports CNBC.
The index is named Bitcoin Misery Index (BMI) and was developed as a trading tool for investors to capitalize on the volatility of BTC exchanges. BMI is calculated on a scale of zero to 100, taking into account factors such as volatility and the number of profitable trades. If the indicator is low, the opportunity is best and vice versa.
“When the bitcoin misery index is at ‘misery’ (below 27), bitcoin sees the best 12-month performance. A signal is generated about every year,” Lee explained to CNBC in a Friday report. “When the BMI is at a ‘misery’ level, future returns are very good.”
The Bitcoin index is currently 18.8, which is an absolute minimum since 6 September 2011, the report states.
Lee’s comments follow a sharp drop in the cryptocurrency market, in which BTC lost nearly 27 percent just after reaching a weekly high of $11,675 on Monday, March 5. A series of negative news has led to increased concerns about growing regulation in crypto markets.
On March 7, the U. S. Securities and Exchange Commission (SEC) issued a statement that all securities trading platforms are obliged to register with the agency as an exchange. In addition, the Japanese authorities temporarily suspended the activities of two cryptocurrency exchanges and issued “punishment notices” to seven others, as reported on 8 March.
Despite the fact that Bitcoin is currently trading at more than 50% of its December 2017 peak, or more than $20,000, Lee has not abandoned his optimistic forecast of $25,000 by the end of 2018.
Tom Lee is known for his optimistic outlook for BTC and as “only major Wall Street strategist to issue regular reports and formal price targets on bitcoin”, according to CNBC