Despite recent gains of nearly 15% this month, some industry experts remain unconvinced that Bitcoin has escaped the bear market that began in October, given it still lags 40% behind its record high. Some forecasters have even predicted a potential drop to as low as $40,000, representing a 70% decline from its all-time peak.
However, analyst James Check considers such a move statistically extraordinary, albeit not impossible. After previously surpassing $126,000 in October and then sliding over 50% to around $60,000 in February before stabilizing, Bitcoin was trading near $78,000 on Friday.
Check scrutinizes the bearish predictions, referencing the Bitcoin Mean Reversion Index, which combines key valuation metrics such as the 200-week moving average and realized price. According to this index, a price of $40,000 would place Bitcoin 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, whereas the current price is around the 31.5th percentile, historically weak but within normal correction ranges.
Check acknowledges that while no event has zero probability in markets, reaching $40,000 would indeed be a near-unprecedented outcome.