Despite Bitcoin's recent gains of nearly 15% this month, some industry experts remain unconvinced that the largest cryptocurrency has escaped the bear market that began in October, given that it still remains 40% below its record high. Some forecasters are even predicting a potential drop to as low as $40,000, which would represent a 70% decline from its all-time high. According to Bitcoin analyst James Check, such a move would be statistically extraordinary, although not impossible.
Check references the Bitcoin Mean Reversion Index, which averages key valuation metrics, including 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, indicating a '0.4 event' that is below any meaningful deviation across major anchors. For perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis. Currently, Bitcoin's price sits around the 31.5th percentile, which is 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.