Despite Bitcoin's recent 15% gain this month, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given that it still remains 40% below its record high. Some forecasters are even predicting a potential drop to as low as $40,000, which would represent a 70% decline from its all-time high. According to Bitcoin analyst James Check, such a move would be statistically extraordinary, although not impossible. Check points to the Bitcoin Mean Reversion Index, which averages key valuation metrics, including the 200-week moving average and volume-weighted average price measures.
When modeled at $40,000, Bitcoin's price would rank in the 0.4th percentile of all daily closes, a level that Check describes as 'below any meaningful deviation across all major anchors.' To put this in perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis. In contrast, the current price sits around the 31.5th percentile, which is historically weak but still within normal correction ranges. Check emphasizes that while there is no zero probability in markets, a drop to $40,000 would be a near-unprecedented outcome.