Despite recent gains of nearly 15% this month, Bitcoin remains 40% below its all-time high, prompting some to predict further declines, with one potential target being as low as $40,000 - a 70% drop from its peak. Analyst James Check views such a drastic move as statistically extraordinary, though not entirely impossible. Historical context and the Bitcoin Mean Reversion Index suggest that a price of $40,000 would be an outlier, ranking in the 0.4th percentile of all daily closes, which is significantly below any meaningful deviation from major valuation anchors. This would be equivalent to Bitcoin trading at approximately $2 in 2011 on a relative basis, far below its current price, which sits around the 31.5th percentile - a level considered historically weak but still within the bounds of normal market corrections.
While acknowledging that no outcome has zero probability in markets, Check describes a drop to $40,000 as 'near-unprecedented'.