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, a 70% decline from its all-time high.
However, analyst James Check considers such a move to be statistically extraordinary, albeit not impossible. Check's analysis is based on the Bitcoin Mean Reversion Index, which combines multiple key valuation metrics to rank Bitcoin's price on a historical percentile basis. According to this index, a price of $40,000 would be a '0.4 event,' placing it in the 0.4th percentile of all daily closes, below any meaningful deviation across major anchors.
For perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, in contrast to its current price, which sits around the 31.5th percentile, historically weak but within normal correction ranges. While Check acknowledges that there is no zero probability in markets, he describes a price of $40,000 as a 'near-unprecedented outcome'.