Despite Bitcoin's recent 15% monthly gain, some experts remain unconvinced that the cryptocurrency has 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, a 70% decline from its all-time peak. However, analyst James Check believes such a move would be statistically extraordinary, albeit 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,' indicating it would fall within the 0.4th percentile of all daily closes, a level Check describes as 'below any meaningful deviation across all major anchors.' For perspective, this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, compared to its current price sitting around the 31.5th percentile, which is historically weak but within normal correction ranges.
Check notes that while there's no zero probability in markets, a $40,000 price point would be a 'near-unprecedented outcome.'