Co-founder of Fundstrat Global Advisors and prominent Wall Street strategist Thomas Lee has created a contrarian index, which shows the observes how miserable Bitcoin investors are at the moment. This index is called ‘Bitcoin Misery Index’. It shows how motivated a person is likely to be to sell their Bitcoin holdings at the moment. It is a trading tool which shows investors if it is a good time to buy Bitcoins. 

In the most basic words, the Bitcoin Misery Index (BMI) shows you a graph based on the sentiments of the holders (or hodlers, if you prefer it that way) - which, on a scale of 1-100 shows how the holders feel based on the current Bitcoin prices. While Cryptocurrency markets follow a number of economic and financial rules, sentiments tend to play a major part in the movement of cryptocurrency prices. 

Going by the data that the Bitcoin Misery Index is showing, the current market sentiment isn’t that great - and holders are feeling really miserable! To put things into perspective, the current misery rating of 18.8 is the lowest since that of 6th September 2011 when it hit a low of 16.2. However, this also means that it is a great time to buy Bitcoins! 

The Bitcoin Misery Index. Souce: Fundstrat

Traditionally, whenever the Bitcoin Misery Index falls below 27, Bitcoin tends to perform really well and prices usually soar over the next 12-month period. If this sentiment analysis is to be believed, Bitcoin prices should witness a major spike over the next few months. BMI allows investors to take the best advantage of the price volatility of Bitcoin prices and invest at an opportune time. In the simplest of words, the lower the score on the Bitcoin Misery Index, the better the time is to buy Bitcoins. Currently, the BMI shows that this is the best time in over six years to buy Bitcoins!

“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. "When the BMI is at a 'misery' level, future returns are very good." 

The Bitcoin Misery Index shows these low numbers because of various reasons - but the biggest factor to Bitcoin investors feeling miserable is that of government regulations. Around the world, governments are getting stricter on cryptocurrencies as well as cryptocurrency platforms. In the US, the Securities and Exchange Commission has been tightening regulations surrounding cryptocurrency exchanges and sending out subpoenas to cryptocurrency investment funds.

In Japan, the FSA has been issuing strict warnings to exchanges which do not have a proper security standard. Russia too has been moving towards legalizing cryptocurrencies and is likely to introduce strict regulations. Indian tax authorities have been getting after cryptocurrency traders. These sort of incidents have been taking place in a number of nations - collectively bringing down the price of Bitcoin as well as making the Bitcoin investors miserable! 

Per CNBC, Lee expects Bitcoin price to reach $20,000 by mid-2018 and end the year at about $25,000. "The BMI is telling us to keep the negative headlines in perspective," he said. "When the BMI is at a 'misery' level, future returns are very good."

Source: Thomas Lee