Despite Bitcoin's recent 15% gain this month, some analysts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, with its value still 40% below its record high. Some forecasters are predicting a potential drop to as low as $40,000, a 70% decline from its all-time high. However, analyst James Check believes such a move would be statistically remarkable, if not impossible. Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics, including the 200-week moving average and volume-weighted average price measures, 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. For perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, whereas its current price sits around the 31.5th percentile, historically weak but within normal correction ranges.
Check acknowledges that while there is no zero probability in markets, a drop to $40,000 would be a near-unprecedented outcome.