Despite Bitcoin's recent gains of almost 15% this month, some industry experts remain unconvinced that the largest cryptocurrency has escaped the bear market it entered in October, given that it is still 40% below its record high. Some forecasters are even predicting a potential drop to as low as $40,000, representing a 70% decline from its all-time high. Bitcoin analyst James Check considers such a move highly unlikely, describing it as statistically extraordinary, although not impossible.
After reaching over $126,000 in October, Bitcoin slid more than 50% to around $60,000 in February before stabilizing, and was trading near $78,000 on Friday. Check argues that the predictions of the bears warrant closer examination. Check references the Bitcoin Mean Reversion Index, which averages key valuation metrics, including the 200-week moving average and realized price, to rank 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.
Check notes that this would be equivalent 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 emphasizes that while there is no zero probability in markets, a $40,000 price point would be a near-unprecedented outcome.