Despite Bitcoin's recent 15% gain this month, some industry experts remain unconvinced that the largest cryptocurrency has escaped the bear market it entered in October, given that it still trails 40% behind its record high. Some forecasters are even predicting a potential drop to $40,000, a 70% decline from its all-time high. Bitcoin analyst James Check considers such a move unlikely, stating that while not impossible, it would be statistically extraordinary. Check references the Bitcoin Mean Reversion Index, which averages key valuation metrics, including the 200-week moving average and volume-weighted average price measures.
At $40,000, Bitcoin would rank in the 0.4th percentile of all daily closes, a '0.4 event' that Check describes as 'below any meaningful deviation across all major anchors.' For perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, whereas the current price sits around the 31.5th percentile, historically weak but within normal correction ranges. Check acknowledges that there's no zero probability in markets, but a $40,000 price would be a near-unprecedented outcome.