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 its current price is still 40% below its record high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its all-time high.
Bitcoin analyst James Check considers such a move unlikely, stating it would be statistically extraordinary, although not impossible. After reaching over $126,000 in October, Bitcoin slid more than 50% to around $60,000 in February before stabilizing, and was trading near $78,000 on Friday. Check suggests that bearish predictions warrant closer examination, pointing to the Bitcoin Mean Reversion Index, which averages key valuation metrics.
When modeled at $40,000, Bitcoin registers as a '0.4 event,' meaning it would fall in the 0.4th percentile of all daily closes, below any meaningful deviation across major anchors. Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, whereas today's price sits around the 31.5th percentile, historically weak but within normal correction ranges. Check adds that while there's no zero probability in markets, a $40,000 price would be a near-unprecedented outcome.