Despite Bitcoin's recent 15% gain this month, some experts believe it has not yet escaped the bear market that began in October, given its current price is still 40% below its record high. Some forecasters are even predicting a potential drop to $40,000, which would represent a 70% decline from its all-time high. James Check, a Bitcoin analyst, considers such a move unlikely, stating it would be statistically remarkable.
Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics, including the 200-week moving average and volume-weighted average price measures. This index indicates that a price of $40,000 would be a '0.4 event', placing it in the 0.4th percentile of all daily closes, significantly below any meaningful deviation. For perspective, Check notes this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis. Currently, the price is around the 31.5th percentile, which is historically weak but within normal correction ranges.
Check emphasizes that while no outcome has zero probability in markets, a drop to $40,000 would be nearly unprecedented.