The recent 15% surge in Bitcoin's value this month has not convinced all industry experts that the cryptocurrency has overcome the bear market that began in October, given it remains 40% below its peak. Some forecasters predict a potential drop to as low as $40,000, representing a 70% decline from its all-time high.
According to Bitcoin analyst James Check, such a drastic move would be statistically remarkable, albeit not impossible. Check referenced the Bitcoin Mean Reversion Index, which combines various valuation metrics, including the 200-week moving average and volume-weighted average price measures, to assess bitcoin's price in historical terms. At $40,000, bitcoin would rank in the 0.4th percentile of all daily closes, indicating an extraordinary event.
This would be equivalent to bitcoin trading below $2 in 2011 in relative terms, compared to its current price sitting around the 31.5th percentile, which is historically weak but within normal correction ranges. Check noted that while no outcome has zero probability in markets, a drop to $40,000 would be nearly unprecedented.