Thomas Lee, the co-founder of Fundstrat Global Advisors and the only major Wall Street strategist to issue regular reports on bitcoin price targets, came up with a new bitcoin-related index which is to show when it is a good time to buy bitcoins. Bearing the name of “bitcoin misery index”, it is calculated on a scale from 0 to 100 and takes into account the number of winning trades out of the total and volatility as well as several other factors.
“Think of this index as a way to measure how happy or sad you are owning bitcoin,” Lee explained while being interviewed by CNBC on Friday evening.
According to the analyst, bitcoin misery index belongs to the group of so-called “sentiment indicators” and thus is designed mainly for contrarian long-run bets. When at lows, the index indicates both bearish trends and good opportunities to make long-term investments in bitcoins.
Meanwhile, bitcoin price yet shows only feeble signs of recovery after rather a tough week. It has fallen about 24 percent since Monday’s local maximum and was as low as $8 900 per coin for some time on Friday morning.
Bitcoin price downfall emerges against the background of negative news from Japan where two cryptocurrency exchanges had to suspend operations after being ordered to do so by the authorities. These measures are being taken following the long-investigated case with Mt.Gox exchange collapse. At the same time, US Securities and Exchange Commission seems to be up for tightening the control over cryptocurrency exchanges as well.
As noted by Thomas Lee, the bitcoin misery index was around 18.8 on Friday, that being the lowest reading since September 2011. Nevertheless, the expert is optimistic about the cryptocurrency’s future.
“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,” – Lee stated, while confirming his earlier prognosis for bitcoin price hitting $20 000 by June and reaching $25 000 by the end of this year.