The recent surge in Bitcoin's value, with a nearly 15% increase this month, has not convinced all industry experts that the cryptocurrency has fully recovered from the bear market that began in October, given it remains 40% below its all-time high. Some forecasters are predicting a significant decline to as low as $40,000, which represents a 70% drop from its peak.
According to analyst James Check, such a drastic move, although not impossible, would be statistically remarkable. Following its climb to over $126,000 in October and subsequent drop to around $60,000 in February before stabilizing, Bitcoin was trading near $78,000 on Friday. Check suggests examining the predictions of bearish forecasters more closely. He references the Bitcoin Mean Reversion Index, which combines various key valuation metrics, including the 200-week moving average and volume-weighted average price measures, to rank Bitcoin's price historically.
Modeling a price of $40,000 places Bitcoin in the 0.4th percentile of all daily closes, described as below any meaningful deviation. For perspective, Check equates this to Bitcoin trading below $2 in 2011 on a relative basis, whereas the current price is around the 31.5th percentile, historically weak but within normal correction ranges. Check notes that while no event has a zero probability in markets, a drop to $40,000 would be nearly unprecedented.