Wall Street Analyst Creates ‘Bitcoin Misery Index’ For Traders

[alyssa85]

https://cointelegraph.com/news/wall-street-analyst-creates-bitcoin-misery-index-for-traders

Wall Street strategist and co-founder of Fundstrat Global Advisors Thomas Lee has developed a ‘contrarian index’ that lets investors know how ‘miserable’ Bitcoin (BTC) holders are based on current prices, CNBC reports.

The index is called the Bitcoin Misery Index (BMI) and was designed as a trading tool for investors to take advantage of volatility in BTC exchanges. BMI is calculated on a scale of zero 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.

“When the bitcoin misery index is at ‘misery’ (below 27), bitcoin sees the best 12-month performance. A signal is generated about every year,” Lee explained to CNBC in a Friday report. "When the BMI is at a 'misery' level, future returns are very good."

At the moment, the Bitcoin index is at 18.8, which is an absolute minimum since Sept. 6, 2011, the report said.

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[cryptocrusher]

It's interesting how they put the figure higher at the recent crash to 8.5k than the previous one to 6k.

Looking at it it seems that it's actually better at predicting a crash than a rise, if you look at all the times that the BMI peaks greatly it's almost always followed by a big fall.

Is it updated on a real time basis?

[figmentofmyass]

this is a bit like broad sentiment reading. probably some good overlap with leveraged commitment of traders (like bfxdata). what's odd to me is how much faster the signal was triggered this time than 2012-2017.

the only comparable case is 2011, which is a bit terrifying---we better hope this isn't 2011. that would have us targeting what, $1000 as the final low?

[Slow death]

leaving the advertising part, in simpler terms to realize what it means for someone like me who is not an expert in economics and technical analysis? what is the function of it and how does it benefit and benefit the laity? and that's what we need to know, if it's something useful or something just to spread it like lately it's becoming very common that anyone who lost reputation and was forgotten by time creates or comments something about bitcoin and earns a few minutes of fame... bitcoin now is the refuge of people that no have fame and forgotten by time

So how does it help or benefit me?

[surfinonmyownwavebaby]

this is a bit like broad sentiment reading. probably some good overlap with leveraged commitment of traders (like bfxdata). what's odd to me is how much faster the signal was triggered this time than 2012-2017.

the only comparable case is 2011, which is a bit terrifying---we better hope this isn't 2011. that would have us targeting what, $1000 as the final low?

Bitcoin has gained a lot more market cap since 2011, it would be hard to believe we could have a swing like that again. And if we did hit $1k, we would never hear the end of it from the mainstream media pundits of Bloomberg and CNBC .

[TERA2]

So everyone was miserable at 20K?? According to this chart everyone got really miserable during the run from 8K-20K... It seems more like its based on the amount of bidrectional volatility opportunities for bearish daytraders. Not very useful.

[figmentofmyass]

So everyone was miserable at 20K??

apparently we haven't reached "misery" until the index is < 27. i guess anything above should be considered no signal. before the recent signal, we hadn't seen "misery" since 2016.

According to this chart everyone got really miserable during the run from 8K-20K... It seems more like its based on the amount of bidrectional volatility opportunities for bearish daytraders. Not very useful.

i think it looks like that because it's a laggy indicator, and because of the "stairs up, elevator down" effect. it reacted really strongly to the november plunge to $5400 and didn't really recover until we were near the top.

the more i think about it, it just reads like an overbought/oversold momentum indicator.