What is the Bitcoin Misery Index (BMI)?

The Bitcoin Misery Index (BMI) is an index that measures the crypto market sentiment as a way to predict crypto investment opportunities.


The Bitcoin Misery Index (BMI) is an index that measures the crypto market sentiment as a way to predict crypto investment opportunities.

Bitcoin Misery Index (BMI) is a term used to measure the momentum of Bitcoin based on its trading value and volatility rates.

The concept of BMI was developed by Wall Street strategist and co-founder of Fundstrat Global Advisors Thomas Lee in March 2018.

What is the Bitcoin Misery Index (BMI)?How does the Bitcoin misery index work?

According to Lee, his creation is a ‘contrarian index’ that lets investors know how ‘miserable’ Bitcoin (BTC) holders are based on the current prices of the most famous digital asset.

The highly speculative nature of Bitcoin favors investors who are able to understand the impact of news announcements and quickly analyze shifts in prices, and place some buy or sell orders on the assets accordingly.

To that effect, the BMI was designed as a trading tool for investors to take advantage of the highly volatile nature of Bitcoin, to make the highest possible profit on exchanges or trade.

The Bitcoin misery index is calculated on a scale of 0 to 100, taking into account factors such as volatility and the number of winning trades out of the total.

When the indicator is low, the buying opportunity is at its best, and vice versa. Thomas Lee explained that “When the BMI is at a ‘misery’ level, future returns are very good.”

When the BMI is low it means that people are “miserable” and that basically falls below 27. At this point, people are “so miserable” that Bitcoin does quite well and it’s a good time to buy, according to Lee.

When the number is high, especially above 67, this means that people are getting euphoric and, as such, that is a signal to sell BTC based on a predicted decline.

Reason for creating the BMI

Interest in Bitcoin grew dramatically in 2016, by the end of the year, BTC had grown by more than 123%.

Entering into 2017, the number of investors in Bitcoin and other cryptocurrencies hit the roof, pushing the price to just under $20,000 in December.

As the popularity and interest in Bitcoin grew, the threats to its stability grew likewise, leading to the formulation of the misery index.

Constant cyberattacks on Bitcoin and other cryptocurrencies have resulted in several countries either banned or creating substantial regulations for the growing industry.

While the BMI is useful in serving as an early warning of market sentiment, it cannot fully predict the future. The BMI cannot predict whether there will be a theft at a cryptocurrency exchange, for example.

Thomas Lee speaks on the current BMI number

On the BMI scale, Bitcoin currently at 39, which is in itself a low number. However, developer of the BMI still insists that Bitcoin (BTC) “isn’t broken” if it’s holding at the current price and volatility levels.

Many expected bearish remarks given the state of the crypto market, and the current BMI number.

In a CNBC interview, Fundstrat’s Tom Lee pointed that the index’s current number of 39 for BMI means that Bitcoin is currently undergoing recovery in its momentum.

Despite Bitcoin currently trading at about 40 percent of its all-time high in December 2017, bullish analyst Thomas Lee has not abandoned his optimistic forecast of $25,000 by the end of 2018.

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