The so-called "bitcoin misery index," newly created by a Wall Street analyst, is now at its lowest level in more than six years.

After a rough week, bitcoin’s value plummeted again on Friday, dropping about 7 percent to $8,700 per U.S. dollar on fears of a crackdown on cryptocurrencies by the Securities and Exchange Commission (SEC). (See also: Bitcoin Price Tanks Amid Sec, CTFC Crackdown.)

Thomas Lee, co-founder of Fundstrat Global Advisors, created the bitcoin misery index to gauge when the digital currency is in “Buy” mode. Among the factors the index takes into account: volatility and the percentage of winning trades of total trades. It’s now reading 18.8, which is its lowest level since Sept. 6, 2011, Lee said.

"When the bitcoin misery index is at 'misery' (below 27), bitcoin sees the best 12-month performance," Fundstrat Global Advisors co-founder Thomas Lee said in a report. "A signal is generated about every year." He is the only major Wall Street strategist to issue regular reports and formal price targets on bitcoin, according to CNBC.

The index, calculated on a scale of zero to 100, is designed as a contrarian indicator, meaning the more negativity it shows, the stronger a “Buy” reading, and vice versa.

bitcoin misery index

(Image: Fundstrat)

So far this week, bitcoin’s price has plunged about 24 percent amid concerns about increased regulatory scrutiny and safety, especially in the U.S. and Japan. Now, it’s less than one-half its value in mid-December, when it hit an all-time high of above $19,000. (See also: Bitcoin Price Sinks as Trading Volume Craters to 2-Year Low.)

On Thursday, Japanese regulators penalized four exchanges and demanded that two others halt operations. Meanwhile, the SEC has been warning trading platforms that they need to register. (See also: Japan’s Regulators Crack Down on Exchanges.)

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