Bitcoin Misery Index Shows Mixed Signals, Another Price Crash Imminent?
One of the biggest news that always keeps crypto investors and traders at the edge of their seat is the price of Bitcoin, and the reason is quite obvious.
The cryptocurrency is the most popular among its peers and when a great authority like Thomas Lee tweets anything on Bitcoin, we have no choice but to listen.
Although the price of bitcoin has been hovering near its highest rate in months, one might not have noticed a big move in Fundstrat Global Advisor's Bitcoin Misery Index.
The head of Fundstrat and a great crypto enthusiast, Thomas Lee tweeted on his verified Twitter handle, saying:
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.
— Thomas Lee (@fundstrat) April 11, 2019
Thomas's Lee's tweet is a wakeup call for crypto traders and investors who are passionate about the market, especially those that lost some of their fortunes last year to the downward slope in the price of bitcoin.
The index, also known as the BMI is used to measure the momentum of bitcoin based on its price and trading activity.
It sums and incorporates the percentage of the winning trades to total trades, as well as its volatility into a score, which is evaluated daily and measured on a scale of 0 to 100.
The value of bitcoin is a great determinant; it determines if the coin is happy or miserable.
Bitcoin is considered happy when the value is above 67 and it's considered miserable when the value is below 27. Anything in-between the two can be ignored, as they are mostly inconsequential.
An experienced trader in the crypto market can testify to the volatile nature of the market, and so all hands must be on deck to ensure they are not on the losing side.
BMI spiked to 89 on April 2, 2019, and in a matter of days, it dropped very drastically to a paltry 20%, a further indication that traders must take BMI more seriously.
BMI is a contrarian indicator, which is designed to help traders understand the market sentiment, which will be helpful in making informed decisions during their trading activities.
A Blast From The Past
Observers in and around the crypto ecosystem are of the view that if the BMI is accurate, it may bring back the dark days of the slump in the price of Bitcoin.
With bitcoin price dangling around $5000 with further hope that it might move up, it is advisable to think twice before pouring more money on the blockchain-based virtual currency, at least for the time being.
The Russian expert is of the opinion that everything that is priced in fiat currency always gets corrupt in one way or another.
Although BMI does not predict price, all they do is measure price sentiment, but it is always good to be a little bit careful.