Despite Bitcoin's recent 15% gain this month, some industry experts remain unconvinced that the largest cryptocurrency has escaped the bear market that began in October, given that it still lags 40% behind its record high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its all-time peak. Bitcoin analyst James Check deems such a move statistically extraordinary, albeit not impossible.
Check's analysis utilizes the Bitcoin Mean Reversion Index, which combines key valuation metrics to rank Bitcoin's price on a historical percentile basis. At $40,000, Bitcoin would register as a '0.4 event,' placing it in the 0.4th percentile of all daily closes, below any meaningful deviation across major anchors. This would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, significantly lower than its current price, which sits around the 31.5th percentile, a historically weak but normal correction range.
Check emphasizes that while no market event has zero probability, a drop to $40,000 would be a near-unprecedented outcome.