Bitcoin Strategist Tom Lee Creates the Bitcoin Misery Index and it says you should buy Bitcoins right now
Cryptocurrency trading is an emerging market that has been growing and capitalizing at a breakneck pace, but it has atypical behavior when compared to traditional markets. It is not uncommon for currency traders to use adopted ForEx market indicators such as MACD, RSI, Bollinger Bands, Stochastic Indicators or Fibonacci’s Retracements, but the truth is that many of these methodologies were created for traditional markets and may not be entirely right for crypto-trading. This has led many economists and “old-school” investors to see investments in cryptocurrencies more as a gamble rather than a real capital investment.
However, this seems to be changing, with the emergence of specialized studies, which have led to improved trading strategies. One that has emerged recently in blogs and news sites is the one created by the well-known Bitcoin Strategist and strong bullish investor Thomas Lee: the Bitcoin Misery Index (BMI)
Although the methodology applied or the mathematical formula for its determination has not been disclosed, the indicator seeks to explain the market’s feeling regarding bitcoins ownership and how motivated a person would be to sell what he has. According to MarketWatch[1]:
“The Bitcoin Misery Index is a measure of consistency in the price of the No. 1 digital asset, bitcoin BTCUSD, +7.07% over the past 90 days, using the end of day performance (up-day or down-day) and volatility. In other words, it is a measure of momentum in the asset, equivalent to an oversold-overbought indicator. Market technicians often gauge “overbought” or “oversold” conditions based on measures of price momentum.”
The results are given on a scale of 0 – 100, where 0 is “absolutely miserable” (bitcoin holders are “absolutely” willing to give away all their bitcoin) and 100 is “absolutely happy” (where no price in the world would be enough to motivate bitcoin holders to sell their coins). Of course in economics, the “absolute” signs indicators do not exist, but it’s easy to conclude that in general terms, Tom Lee developed an indicator, which analyzes the behavior and characteristics of the bitcoin to produce a more accurate result than other similar indexes.
The indicator created by FondStrat’s owner shows a negative result. That is to say, the lower the number, the bigger the misery /, The bigger the number, the lower the misery)
In the world of trading there are already other similar indicators such as the RSI[2] (Relative Strength Index) which, as stated by Investopedia “compares the magnitude of recent gains and losses over a specified time period to measure speed and change of price movements of a security” , and the MACD[3] which is “a trend-following momentum indicator that shows the relationship between two moving averages of prices”.
Investors often use these
