Early April, bitcoin received a huge boost from a mystery buyer and the cryptocurrency shot to around $5,000. Investors might have dismissed the spike hoping for the coin to slide back to levels it had sunk since the beginning of a huge slide in 2018. However, the climbing of the token saw the whole market rise.
BMI is higher than ever before in a bear market
For starters, Bitcoin has spent much of the period before April 2 at levels around $4,000. Compared to the historical high of about $20,000, this represents a mighty fall of about 80%. However, knowledgeable observers are beginning to see a reverse in the trend, especially after the sudden rise earlier this month. Notably, the analysts note that market sentiment for Bitcoin is turning positive after remaining unfavorable for the better part of 2018.
In an interview, Tom Lee, Fundstrat Global Advisors, noted that the sentiment indicates an oncoming bull market. For starters, Fundstrat runs a Bitcoin Misery Index (BMI) which feels for the bitcoin sentiment pulse in the market. As per Lee, the BMI reading in the recent weeks climbed to 89 which is an indicator of a strong bull market. Notably, the BMI reading for the whole of 2018 remained below 50, understandably so, due to the dangerous fallout in the cryptocurrency market. Further, the assessment by Lee draws confidence from the fact that the BMI reading has never surpassed 67 during a bear market.
Could another record high be in the horizon?
At the time of writing, Bitcoin was at $5,320, a 0.63% gain since the close of the last 24 hour trading period. Further, this represents close to 60% gain since record lows attained in early February. Various analyses of BTC/USD pair shows that there is room for a further rally. Since the dramatic rise, the pair has remained adamant at levels above $5,200 which is evidence of an approaching rising wedge pattern breakout.
Another reason for optimism is the comparison of the bear period right before a major bull market. Notably, the token came out of the 2016 lows after a huge spike where investors rushed to amass bitcoins in large numbers. Since the spike, bitcoin went on to achieve the highest levels. This April, a similar spike happened and, as such, knowledgeable observers like Tom Lee are bracing for a possible period of record highs.