The recent surge in Bitcoin's value, with a nearly 15% increase this month, has not convinced all industry experts that the cryptocurrency has escaped the bear market that began in October, given it remains 40% below its record high. Some forecasters are predicting a potential drop to as low as $40,000, a staggering 70% decline from its all-time peak. Bitcoin analyst James Check views such a move as improbable, stating it would be statistically extraordinary, albeit not impossible, in a post on X. Following its climb to over $126,000 in October, Bitcoin plummeted 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 a closer examination. He references the Bitcoin Mean Reversion Index, a composite model that averages key valuation metrics, including the 200-week moving average and realized price, to rank Bitcoin's price on a historical percentile basis. When modeled at $40,000, Bitcoin falls into the 0.4th percentile of all daily closes, which Check notes is 'below any meaningful deviation across all major anchors.' To put this into perspective, Check equates this to Bitcoin trading below $2 in 2011 on a relative basis, whereas the current price sits around the 31.5th percentile, historically weak but within normal correction ranges.
Check acknowledges that while there is no zero probability in markets, reaching $40,000 would be a near-unprecedented outcome.