If you have some Bitcoin, now’s not really a good time considering how the cryptocurrency dropped from $8,500 in recent weeks to just below $7,000. Roughly around 12% was lost in just one week. Already planning to sell your cryptos? Now, you have the likes of Tom Lee who remains bullish with Bitcoin. Tom Lee made a prediction months back that Bitcoin is going to hit $25,000 this year only to pull back on his first prediction to just $22,000.
Can Good News Even Be Positive?
Despite the bearish trend in the past week, there is some good news in the crypto industry. For one, Goldman Sachs is still interested in cryptos. If everything works according to their plan, it can be a custody solution for crypto investors.
But if you are going to ask Tom Lee, he says that this type of news is exactly what the cryptocurrency market needs right now. In his interview on CNBC’s “Fast Money”, he mentioned that “The news that we have seen, from the SEC saying bitcoin’s a commodity, to…the potential for an (exchange-traded fund) is causing investors to decide that bitcoin is the best house in a tough market”.
It is true that Bitcoin along with Ethereum have both been considered by the US Securities and Exchange Commission as commodities. However, other cryptocurrencies are not included in this statement. In fact, the third largest cryptocurrency by market capitalization, Ripple, has been dealing with lawsuits.
He also said that “Bitcoin isn’t broken if its holding at these levels. I think people are afraid it is going ot go back down to $6,000 and never come back from the bear markets”.
In Line with Past Corrections
Should you be bothered by the trends lately? Considering that Bitcoin came from near $20,000 right before the end of 2017? For Lee, he mentioned that the decline in Bitcoin’s price is historically in line with the past corrections that the cryptocurrency had in the past. He also mentioned that it now depends on new cash flow for the cryptocurrency to recover.
For Lee, the current situation shows that Bitcoin is demonstrating strong fundamentals. Though the price is low, Bitcoin is still the largest cryptocurrency.
Bitcoin Misery Index
Lee also discussed the Bitcoin Misery Index. What is the misery index exactly? It is a measure of Bitcoin holders’ feeling towards the cryptocurrency. When BMI is low, then people are “miserable” and when the number is below 27, people are “so miserable”. This can be a sign when to buy Bitcoin according to Tom Lee. He believes that if the BMI is over 67, then people are euphoric and it is a good time to sell. Right now, he believes that the BMI is at 39. This means that it is a solid ground for recovery.
Slowly, regulatory clarity is happening. There is also a chance that a Bitcoin ETF is actually going to happen despite the rejection of the Winklevoss Bitcoin ETF application for the second time around. Though the agency hesitates about the possibility of price manipulation, it could actually be a good time to buy your Bitcoin today.