Now is the time to buy bitcoin, according to a new "misery index" for the cryptocurrency created by a Wall Street strategist.

"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 Friday report. "A signal is generated about every year."

The bitcoin misery index is at 18.8, its lowest since Sept. 6, 2011, the report said.

"Think of this index as a way to measure how happy or sad you are owning bitcoin," Lee told CNBC on "Fast Money" Friday evening.

As of Friday the index was around 18.8 on a scale of 100, "telling us that bitcoin holders are miserable," right now, said Lee, who pointed out that it was the lowest reading since Aug. 2011.

Bitcoin performance after the Bitcoin Misery Index falls below 27

Source: Fundstrat

Similar to other sentiment indicators, the bitcoin misery index is meant to be a contrarian indicator. When the misery index is low, investors should buy, and vice versa. The index takes into account factors such as the number of winning trades out of the total and volatility.

The report comes at the end of a tough week for bitcoin. The cryptocurrency's price has fallen about 24 percent from the high it hit on Monday after a slew of negative reports raised concerns about increased regulatory scrutiny.

While short term the low points are a signal of pain, long term it could be a great entry way into bitcoin, Lee said.

"The last four times this was below 27...there was not a single instance with bitcoin not up 12 months later," Lee said.

On Wednesday, a major Hong Kong-based exchange said some accounts may have been compromised, while the U.S. Securities and Exchange Commission expanded its scrutiny to cryptocurrency exchanges and "wallets," which are companies for storing digital assets. On Thursday, Japanese authorities suspended operations at two cryptocurrency exchanges for a month and ordered business improvements at five other exchanges.

Also hitting sentiment was a Wednesday report about the now-defunct Japanese exchange Mt. Gox that said the trustee of its funds sold roughly $400 million in bitcoin and its offshoot bitcoin cash.

Bitcoin over the last 12 months

Source: CoinDesk

Bitcoin was trading more than 3.5 percent lower near $8,900 Friday morning, according to CoinDesk's bitcoin price index. The cryptocurrency remains about 800 percent higher over the last 12 months but has fallen more than 50 percent from its record high above $19,000 hit in mid-December.

"It is really uncommon to be this miserable owning bitcoin," Lee said. The last few times this happened, according to the analyst, was in Nov. 2012, Sept. 2016 and Jan. 2015.

"And bitcoin was higher a month later," Lee said. "[The index] is telling us, it's really tough to own it for the next week or even two weeks, three weeks. But we're getting through this."

Fundstrat's Lee is the only major Wall Street strategist to issue regular reports and formal price targets on bitcoin. He was J.P. Morgan Chase's chief equity strategist before co-founding Fundstrat.

On Friday, Lee maintained his midyear bitcoin price target of $20,000 and year-end target of $25,000.

"The BMI is telling us to keep the negative headlines in perspective," he said. "When the BMI is at a 'misery' level, future returns are very good."