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 are even predicting a potential drop to as low as $40,000, a 70% decline from its all-time high.
However, analyst James Check believes such a move would be statistically extraordinary, albeit not impossible. Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics to rank Bitcoin's price on a historical percentile basis.
At $40,000, Bitcoin would register as a 0.4 event, falling in the 0.4th percentile of all daily closes, far below any meaningful deviation across major anchors. To put this into perspective, Check notes that this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis. In contrast, the current price sits around the 31.5th percentile, which is historically weak but within normal correction ranges.
While Check acknowledges that there is no zero probability in markets, he considers a $40,000 price point to be a near-unprecedented outcome.