Despite Bitcoin's recent 15% gain this month, some industry observers remain unconvinced that it has escaped the bear market that began in October, given that it still lags 40% behind its record high. Some forecasters have even predicted a potential drop to as low as $40,000, which would represent a 70% decline from its all-time high.
Bitcoin analyst James Check views such a move as unlikely, stating that while not impossible, it would be statistically extraordinary. Check references the Bitcoin Mean Reversion Index, which averages multiple key valuation metrics, including the 200-week moving average and realized price, to argue that a price of $40,000 would be a '0.4 event,' ranking in the 0.4th percentile of all daily closes. This would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, and Check notes that the current price, while historically weak, remains within normal correction ranges, sitting around the 31.5th percentile.
Check emphasizes that while there is no zero probability in markets, a $40,000 Bitcoin price would be a near-unprecedented outcome.