The Bitcoin Misery Index, a technical indicator of trades, has been falling all summer. The indicator is sinking to 50 points, a level at which Bitcoin (BTC) prices may start to rally, thinks Fundstrat’s Tom Lee.
The Bitcoin Misery Index (BMI) by Fundstrat is a subscription-only technical indicator based on the profitability of average trades. High scores for the index point to exuberance and hype, while low scores show that most investors are “miserable” and the market is difficult to navigate.
Bitcoin on the Bounce
Since the hot price moves of July, Bitcoin turned flat, and the BMI deflated slowly over the course of a few months. BMI sank from 67 down to around 53. Investment expert Tom Lee of Fundstrat pointed that BTC had a “boring” summer, but with the index under 50, more dramatic moves are possible.
For those wondering if the Bitcoin Misery Index still is useful. It told us markets would be trendless after July.
– we shared this with our clients on July 30th. https://t.co/CWXdz1jD3i
— Thomas (Tom) Lee (not drummer) FSInsight.com (@fundstrat) September 9, 2019
Following a “trendless” summer, bitcoin enters September with expectations of a possible shift in sentiment.
BTC remained stuck in a range, moving between $9,500 and $10,500 on most days. Other indexes, such as the “fear and greed” indicator, remained shaky. Fear is no longer extreme, but BTC is still somewhat directionless.
Bitcoin market prices appeared even shakier on Monday, sinking down to $10,279.69. The price slide and weakened volumes also brought lower market capitalization dominance of 69.7%, down from 71% in the previous week.
Time to FOMO?
Lee expects the BMI to be within the 50-53 points range in early September. At those levels, this predicts a potential stronger appreciation in the coming six months. The index is not an exact predictor, but Fundstrat sees more tailwinds for bitcoin than headwinds. Macroeconomic factors are also in play, such as a lowered Fed interest rate, as well as high fiat liquidity.
Fundstrat warned of lowered volumes, as BTC trading moved down to $16 billion in 24 hours, down from above 25 billion during the more active days in July. Lowered volumes may also cause unpredictable, dramatic price moves.
The most bullish predictions see bitcoin repeat the end-of-year rally from 2017. Fundstrat believes crypto winter is behind us, but a rally is not guaranteed.
Short-term negative predictions for BTC see the coin returning to $8,500, or at best hovering in rangebound trading. “Launchpad” levels may start at prices above $11,700, if BTC manages to rally to that range.
What are your thoughts on BTC sentiment? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @Fundstrat