Despite Bitcoin's recent 15% gain this month, some 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 $40,000, a 70% decline from its all-time high.
However, bitcoin analyst James Check considers such a move highly unlikely, describing it as statistically extraordinary. Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics to rank bitcoin's price on a historical percentile basis.
At $40,000, bitcoin would register as a '0.4 event,' indicating it would fall within the 0.4th percentile of all daily closes, an outcome Check describes as 'below any meaningful deviation' and 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 acknowledges that while no market event has a zero probability, a $40,000 price point would be a 'near-unprecedented outcome'.