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 it still lags 40% behind its record high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its all-time peak.
According to Bitcoin analyst James Check, such a move, although not impossible, would be statistically remarkable. Following its surge above $126,000 in October, Bitcoin plummeted over 50% to around $60,000 in February before stabilizing, and was trading near $78,000 on Friday. Check argues that the bears' predictions deserve closer examination.
He references the Bitcoin Mean Reversion Index, which averages key valuation metrics, including the 200-week moving average and volume-weighted average price measures, ranking Bitcoin's price on a historical percentile basis. At $40,000, Bitcoin would register as a '0.4 event,' placing it in the 0.4th percentile of all daily closes, below any meaningful deviation across major anchors, equivalent to Bitcoin trading below $2 in 2011 on a relative basis.
By contrast, the current price sits around the 31.5th percentile, historically weak but within normal correction ranges. Check notes that while there's no zero probability in markets, achieving $40,000 would be a near-unprecedented outcome.