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Bitcoin Misery Index Tells Investors Now is the Best Time to Buy

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The Bitcoin Misery Index (BMI) has fallen to its lowest level since 2011, sending a strong signal to investors that now is the ideal time to buy, according to Wall Street strategist and index creator Thomas Lee.

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BMI Falls Below 20

The index recently touched a low of 18.8 on a scale of 1-100 where 27 is seen as an important indicator of bullish price action. That’s the lowest level since September 2011.

Lee developed the BMI as a contrarian indicator, which tells investors to buy when readings are low and sell when the headline figure is high. In an interview with CNBC last Friday, Lee said bitcoin has never failed to rise over the next 12 months each time the index fell below 27. By his count, BMI has fallen below that key level on four occasions, leading to a bullish year-long rally for the world’s biggest crypto asset.

In other words, BMI is telling investors that bitcoin is oversold, undervalued or a combination thereof.

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Lee has a bullish outlook on bitcoin, telling CNBC that he is maintaining his mid-year price forecast of $20,000 and end-of-year target of $25,000.

Factors Behind the Drop in BMI

Bitcoin has been dragged through the mud in recent weeks by an outsized reaction to regulators’ comments on the digital asset class. This included an announcement by the U.S. Securities and Exchange Commission (SEC) that crypto exchanges must register with the agency to provide trading of so-called security tokens. However, this is largely consistent with the regulator’s treatment of initial coin offerings since last July when it deemed The DAO to be a security.

In reaching six-and-a-half year lows, Lee’s BMI plunged 24% from last Monday’s high. Prior to the decline, bitcoin looked poised to re-test $12,000.

“The BMI is telling us to keep the negative headlines in perspective,” Lee told CNBC. “When the BMI is at a ‘misery’ level, future returns are very good.”

Bitcoin is heavily influenced by news headlines and the market’s evolving perceptions about the legality of digital assets. Lee said this is unlikely to change anytime soon and that the next few weeks will probably be the most difficult for long-term investors. However, it is very likely that the market will turn a corner over the next three weeks.

Bitcoin prices peaked near $20,000 last December following a massive yearlong run that quickly spread to other digital assets. The coin lost some of its zeal in the new year as investors shifted their focus to the booming world of altcoins. Prices would later plunge below $6,000 as the crypto market shed two-thirds of its market cap.

Bitcoin traded around $9,100 on Tuesday for a market cap of $155 billion.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 414 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

(more…)

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 256 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin

John McAfee Just Made Some Bold Predictions for Bitcoin, Bitcoin Private

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Technologist and crypto bull John McAfee has made a series of eyebrow-raising predictions concerning bitcoin and bitcoin private. While McAfee is no stranger to gutsy calls, his new forecast sees bitcoin prices doubling in a matter of weeks. And yes, the forecast came after the Wednesday price collapse.

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McAfee Raises the Stakes on Bullish Bets

In a Thursday tweet, McAfee predicted the market will “turn” before June 12, which was the original date of the planned summit between U.S. President Donald Trump and Kim Jong-un of North Korea. McAfee’s algorithm expects a Korea deal to get signed on that day even as Trump signaled on Thursday for the cancellation of the meeting.

According to the post, McAfee expects bitcoin to surpass $15,000 in June before dipping again in July. Bitcoin bottomed below $7,300 on Thursday. It was last seen trading at $7,563.

Bitcoin private, the so-called meta currency that ‘merge-forked’ from bitcoin and Zclassic, is expected to hit $200  by the end of July. At the time of writing, BTCP was trading at $25.61, having gained more than 33% over the past 24 hours.

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BTCP entered circulation in early March as a fork from Zclassic, which itself forked from bitcoin. Bitcoin private is therefore seen as a ‘fork of a fork of a fork.’

McAfee also expects EOS to jump to $32 by the end of July from its current level of $12.48. EOS has skyrocketed to the No. 5 spot on the market cap rankings with a total value of $11 billion.

Institutional Demand

Earlier this week, McAfee heralded the arrival of institutional money to the cryptocurrency market, arguing that it will spark the next leg of the rally.

“Institutional investors are preparing to enter the cryptocurrency market with a vengeance” he tweeted Monday. “They are generally long term investors and will be pumping billions into the market. Expect the top ten coins to go through the roof fairly quickly. The bulk of alt coins will soon follow.”

Digital currency exchange Coinbase has expressed the same opinion and has launched a suite of products to ease institutional money’s transition to crypto.

Crypto analyst Tom Lee has also appealed to institutional demand to justify his bullish outlook on bitcoin in the face of multiple declines. In a recent interview with CNBC, Lee said institutional interest in crypto has only just begun and that demand will continue to grow once regulatory uncertainties are ironed out.

Lee maintains a price target of $25,000 for bitcoin.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 414 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Bitcoin

Bitcoin’s Plunge Has Not Shaken Tom Lee

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Bitcoin’s latest technical breakdown hasn’t affected Tom Lee’s bullish outlook on the digital currency. The head of research at Fundstrat Global Advisors is standing by his target of $25,000 by year’s end.

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Typical Volatility

In an email conversation with CNBC, Lee said the latest drop in market prices can be attributed to “typical market volatility” rather than any new underlying risks facing digital assets. He also identified three factors that will lead bitcoin to $25,000.

The first factor is cost of production, which Lee identified as anywhere between $6,000 and $8,000 during the most recent slide. This means bitcoin is still worth more than its cost of production.

Growing interest from institutional traders will also keep the market rallying for the foreseeable future. Banks and other financial institutions are still feeling their way into the crypto market and are looking for regulatory guidance on how to move forward.

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In a Tuesday interview with CNBC’s “Futures Now,” Lee issued the following statement:

“I think institutional investors have gained a lot of interest, and they haven’t really come into crypto yet because there is still some regulatory uncertainty. But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”

Lee also reminded investors just how quickly the crypto market can change. A historical analysis reveals that the entirety of bitcoin’s gains in any given year can be attributed to ten days. Without those days, bitcoin values are down 25% annually.

“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” he said.

BTC/USD Price Levels

Bitcoin prices bottomed at $7,289.35 on Thursday, their lowest in about six weeks. The cryptocurrency has declined nearly 10% over the past week.

At last check, BTC/USD had recovered around $7,508 for a total market cap of $128.3 billion. Selling pressure brought more volume to the market, with total turnover in bitcoin approaching $7 billion.

With the latest skid, bitcoin is down more than 40% this year.

The market cap for all cryptocurrencies bottomed at $318.8 billion on Thursday but has since recovered to around $333 billion. The market is down nearly $60 billion from its Sunday high.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 414 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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