Despite Bitcoin's recent 15% gain this month, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it still lingers 40% below its record high. Some forecasters predict a potential drop to $40,000, a staggering 70% decline from its all-time peak. Bitcoin analyst James Check considers such a move highly unlikely, describing it as statistically extraordinary, albeit not impossible.
Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics such as the 200-week moving average and realized price. When modeled at $40,000, Bitcoin's price falls into the 0.4th percentile of all daily closes, a level Check describes as below any meaningful deviation.
For perspective, this would be equivalent to Bitcoin trading at under $2 in 2011 on a relative basis, compared to its current price sitting around the 31.5th percentile, a historically weak but normal correction range. Check cautions that while no market event has zero probability, a drop to $40,000 would be a near-unprecedented outcome.