By
Steve Muchoki
April 23rd, 2024
Lee, in his analysis, has presented a new Bitcoin Misery Index which is a contrarian indicator which meaning the lower Bitcoin goes, the higher are the chances to rise again.
The overall cryptocurrency market has gone through a painful journey so far in 2018. There has been a significant erosion of more than 50% in the overall valuations of the crypto markets which started the year at above $800 billion valuations and is currently at around $330 billion. The journey of the most dominant cryptocurrency ‘Bitcoin’ has been on similar lines which started the year above $17,000 and has corrected by more than 50% to trade currently at $8500 levels, according to data on CoinMarketCap.
Although Bitcoin price has been moving sideways, popular analyst and head of research at Fundstrat Global Advisors – Tom Lee – continues to remain bullish. Lee recently made yet another claim that by March 2020, Bitcoin can rise to as high as $91,000. Lee’s predictions are based on a huge database, graphs and statistics on Bitcoin which helps to chart the short-term and long-term trends. The details include the cost of Bitcoin mining, daily and monthly trading trends and deep technical analysis.
Last week the crypto markets witnessed yet another deep correction of this year where nearly $50 billion-plus were wiped off from the overall market cap. The correction came as a result of multiple reports of increased global scrutiny of regulatory bodies along with Google’s ban on crypto ads adding to further woes. Fundstrat analysts including Tom Lee and Robert Sluymer wrote: “When sentiment is this weak, the market is increasingly ’fire, ready, aim’ — meaning, any headline today is likely to trigger selling.”
Earlier this month, Lee also presented the Bitcoin Misery Index or BMI which is currently at the second-lowest point in past eight years. The BMI is a contrarian indicator which means that the lower it goes, the higher are the chances of Bitcoin to rise again. The graph that Lee and his team has presented shows that it is not for the first time that Bitcoin has corrected by this huge margin and similar losses have occurred in stretches during the 2011 and 2013 period. But the graph also goes to show that after every such drop, the cryptocurrency has delivered a solid pull-back thereby eclipsing the returns of any other digital currency during the same time-period.
Lee describes this recovery as a “monster-rally” wherein Bitcoin is shown to have generated unprecedented returns. This is not for the first time that Tom Lee has made such predictions. Earlier this year, Tom Lee said that Bitcoin might hit the $25000 benchmark by the end of 2018.
Apart from just Bitcoin, Tom Lee remains bullish on other cryptocurrencies like Ethereum which in addition to Bitcoin will benefit from “larger and more established blockchains growing in dominance” this year, as mentioned in the Fundstrat report.
Moreover, Forbes in the recent article said that the ban on crypto advertisements will, in fact, help fundamentally strong cryptocurrencies like Bitcoin, Ethereum, Ripple and others. It says that the ban will further help to filter out all the scam coins in the market due to which investors will shift more towards the fundamentally strong ones.