The recent surge in Bitcoin's value, with a nearly 15% increase this month, has not convinced all industry experts that the cryptocurrency has escaped the bear market that began in October. Currently, it remains 40% below its all-time high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its record high.
Bitcoin analyst James Check considers such a move unlikely, stating it would be statistically extraordinary, although not impossible. Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics, including the 200-week moving average and volume-weighted average price measures. When modeled at $40,000, Bitcoin falls into the 0.4th percentile of all daily closes, indicating a highly unusual event. For perspective, Check notes this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis.
In contrast, the current price is around the 31.5th percentile, which is historically weak but within normal correction ranges. Check emphasizes that while no market event has a zero probability, a $40,000 Bitcoin price would be a near-unprecedented outcome.