Despite Bitcoin's recent surge of nearly 15% this month, reaching $78,772.68, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it still lingers 40% below its record high. Some forecasters predict a potential plummet to as low as $40,000, a staggering 70% decline from its all-time peak. Bitcoin analyst James Check deems such a drastic move unlikely, describing it as statistically extraordinary, albeit not impossible. Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics such as the 200-week moving average and realized price, to assess bitcoin's price in historical percentile terms.
At $40,000, bitcoin would rank in the 0.4th percentile of all daily closes, an event so rare it would be comparable to bitcoin trading below $2 in 2011 in relative terms. Currently, the price is at the 31.5th percentile, which is historically weak but within the bounds of normal market corrections.
Check emphasizes that while no outcome has a zero probability in markets, a drop to $40,000 would indeed be a near-unprecedented outcome.