Fundstrat’s Tom Lee keeps bringing positivity to the crypto market by revealing that his ‘Bitcoin Misery Index’ (BMI) has reached its highest level since 2016. However, this shouldn’t be treated as a surefire indicator of another bullish trend.
A new dose of happiness
The BMI determines how Bitcoin investors feel about the market situation on a scale from 0 (the most miserable) to 100 (the happiest). On Apr. 2, when Bitcoin surged 20 percent in less than one hour, it reached a value of 89 –the highest it’s been since 2016.
This is supposed to prove that Bitcoin might record further gains in the nearest future given that a happiness level above 67 was only recorded during bull markets. On the flip side, the prescient Wall Street analyst points out that it could also precede a sharp price drop (case in point: January 2018).
The Bitcoin Misery Index reached 89 on 4/2. Highest reading since June 2016. Means good and bad.— Thomas Lee (@fundstrat) April 11, 2019
Good--> Since 2011, BMI >67 only seen during $BTC bull markets. More evidence bull starting.
Bad --> BMI >67 after peak, $BTC falls ~25% = Profit taking ST.#bitcoinmiseryindex pic.twitter.com/X55q2ypiCA
Institutions are betting on BTC
As reported by U.Today, institutional Bitcoin trading volumes have been on the rise for four consecutive months with a huge spike in April. Lee believes that Bitcoin’s negative correlation to the S&P 500 (coupled with low volatility) could be the main reason why.
2/ from page 9 of @fundstrat_ken report, BTC correlation to S&P 500 has turned negative.— Thomas Lee (@fundstrat) April 12, 2019
Couple that with low volatility everywhere and It partially explains why institutions have been buying crypto recently pic.twitter.com/7fVhRGtO7D
Earlier, Anthony ‘Pomp’ Pompliano claimed that there was practically zero correlation between BTC and the S&P 500.