Bitcoin ‘Misery Index’ Flashes Highest Since Mid-2016; Crash Coming?

Journalist:
April 12, 2019

While bitcoin hovers near its highest price in months, you may not have noticed a big move in Fundstrat Global Advisors’ Bitcoin Misery Index. Fundstrat head and perma-bull Thomas Lee tweeted the news on April 11:

Key Indicator Flashes Warning Sign for Bitcoin’s Price

The index, known as BMI, measures the momentum of bitcoin based on its price and trading activity. It incorporates the percentage of winning trades to total trades, as well as volatility, into a daily score measured on a scale of 0 to 100.

Bitcoin is considered “miserable” when the value is below 27 and “happy” when the value is above 67. You can ignore anything in between.

On April 2, BMI spiked to 89, its highest score since June 2016—just days before bitcoin dropped almost 20%.

Will history repeat itself?

If BMI is accurate, it will. Maybe today’s drop begins the downtrend?

BMI is a contrarian indicator. It’s designed to help traders understand the market sentiment, which they can then trade against for profit.

Happiness is not a buying opportunity. In fact, Lee recommends taking profits and buying back in at a lower price.

With bitcoin’s price hugging the psychologically-important $5,000 mark and technical indicators signaling further moves up, you might want to think twice about pouring more money into bitcoin, at least for a little while.

Or not:

Lee’s Price Predictions Don’t Always Pan Out

For those who choose to throw caution to the wind, you may take solace in knowing BMI is does not predict price, it measures market sentiment. Tom Lee’s price predictions have rarely come true (though he’s not predicting price here, just direction).

It’s possible we’re in store for another move up—this is crypto, after all. Bloomberg doesn’t think so, but they’re worse than Tom Lee at predicting bitcoin’s price.

Maybe Crypto YouTube can shed some light? Mr. Kristof and That Martini Guy blame Julian Assange for the drop in price. CryptoCrewU crows about golden crosses leading to “legendary moves” while Alessio Rastani warns this latest rally is losing momentum. A mixed bag.

Some say Google trends is a better predictor. When more people search about bitcoin, price tends to go up. When fewer people search about bitcoin, price tends to go down.

As of April 12, 2019, Bitcoin is trending down.

Does this mean bitcoin’s price is about to dump?

Last modified (UTC): April 12, 2019 10:31

Mark Helfman @mkhelfman

Mark Helfman is author of Consensusland, a book about a country that runs on cryptocurrency. He was an aide for several Congresspeople, including Nancy Pelosi, before joining the U.S. civil service. His views do not represent the views of any U.S. government agency. See what else he’s writing about at markhelfman.com