Despite Bitcoin's recent 15% gain this month, reaching $77,620.91, 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. Analyst James Check considers such a move unlikely, stating it would be statistically remarkable, though not impossible.
After surging past $126,000 in October and then sliding over 50% to around $60,000 in February before stabilizing, Bitcoin was trading near $78,000 on Friday. Check argues that bearish predictions warrant a closer examination, citing the Bitcoin Mean Reversion Index, which averages key metrics like the 200-week moving average and realized price. When modeled at $40,000, Bitcoin's price falls into the 0.4th percentile of all daily closes, a level Check describes as below any meaningful deviation. This would be equivalent to Bitcoin trading below $2 in 2011 in relative terms.
In contrast, the current price sits around the 31.5th percentile, historically weak but within normal correction ranges. Check notes that while no market event has a zero probability, a drop to $40,000 would be a nearly unprecedented outcome.