Despite Bitcoin's recent surge of nearly 15% this month, reaching $76,174.61, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it is still 40% below its record high. Some forecasters are even predicting a drastic drop to as low as $40,000, a 70% decline from its all-time high. However, analyst James Check believes such a move is statistically extraordinary, albeit not impossible.
Check references the Bitcoin Mean Reversion Index, a composite model that averages key valuation metrics, including the 200-week moving average and realized price. According to this index, a price of $40,000 would be a '0.4 event,' placing it in the 0.4th percentile of all daily closes, below any meaningful deviation across major anchors. To put this into perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis.
In contrast, 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 drop to $40,000 would be a near-unprecedented outcome.