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 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. According to analyst James Check, such a move, although not impossible, would be statistically remarkable.
Bitcoin's price, which surpassed $126,000 in October before sliding over 50% to around $60,000 in February, was trading near $78,000 on Friday. Check suggests that bearish predictions warrant a closer examination. He references the Bitcoin Mean Reversion Index, which combines key valuation metrics such as the 200-week moving average and realized price to rank Bitcoin's price historically. At $40,000, Bitcoin would register as a 0.4th percentile event, indicating an extremely rare occurrence.
For perspective, Check notes this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, whereas the current price is around the 31.5th percentile, historically weak but within normal correction ranges. Check emphasizes that while no event has zero probability in markets, reaching $40,000 would be a nearly unprecedented outcome.