BTC Wires

Key Metrics Indicate Warning Signs For Bitcoin Price

After an eventful one and a half week of unprecedented price rise of Bitcoin and other altcoins, the market is nearing another bottom, and key metrics suggest that the cryptocurrency space might experience another crash. The recent surge saw the majority of the cryptocurrencies make double-digit gains and break their key resistance levels to peak their highest price in months.

However, many missed the Fundstrat Global Advisors’ Bitcoin Misery Index which suggests the key metrics on the chart has the highest reading since June 2016. The metrics spew both good and bad news,

  • 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

The Bitcoin Misery Index (BMI) measures the momentum of Bitcoin against the prices as well as its trading volume. The index measures the good trades against the total number of trades and the price volatility, and all these metrics are combined to create a daily scale ranging from 1-100.

According to these metrics, the score of 27 or below is considered not healthy, while anything above 67 is great. On April 2nd when the crypto trade market saw an uprise, the BMI score touched 89, highest since June 2016, but now Bitcoin has dropped 20% of its value.

BMI has been designed to help the traders to understand the market sentiments and then organize their trading to help them make better deals. However, the misery index suggests that the Bitcoin might be nearing another bottom before gaining pace towards the end of the year.

BMI Does Not Predict the Price But Indicates Market Sentiments

One must note that the BMI index or score is not correlated with the price, but the market sentiments, which in turn suggest the fluctuation of the market pricing.

The BMI score was shared by Thomas Lee who is a bit unpopular in the crypto space for his absurd price predictions. His 2018 price predictions came crashing down after the crypto space one of the longest crypto winters in 2018.

The truth is no index or scale, no matter how sophisticated or complicated they are have been able to predict the price fluctuation of the crypto space. Many believe Google trends are a better indicator as it shows the number of Bitcoin searches, which only rises when the market sentiments are bullish and more people are interested or looking to invest in the digital asset.