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 is still 40% below its record high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its all-time high. However, analyst James Check deems such a move 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.
At $40,000, Bitcoin would rank in the 0.4th percentile of all daily closes, below any meaningful deviation. For perspective, this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis. Currently, the price sits around the 31.5th percentile, historically weak but within normal correction ranges. Check notes that while no event has zero probability in markets, a drop to $40,000 would be a near-unprecedented outcome.