Despite Bitcoin's recent 15% gain this month, reaching $76,350.59, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it 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. Analyst James Check considers such a move unlikely, stating it would be statistically remarkable. After soaring 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 scrutinizes the bearish predictions, citing the Bitcoin Mean Reversion Index, which averages key valuation metrics such as the 200-week moving average and realized price. The index indicates that a price of $40,000 would rank in the 0.4th percentile of all daily closes, an extraordinary event. 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 acknowledges that while no outcome has zero probability in markets, a drop to $40,000 would be nearly unprecedented.