Despite Bitcoin's recent surge of nearly 15% this month, some experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given that it still lags 40% behind its record high. Some forecasters are even predicting a potential drop to as low as $40,000, a staggering 70% decline from its all-time peak. Analyst James Check views such a scenario as unlikely, describing it as statistically extraordinary, albeit not impossible.
Check references the Bitcoin Mean Reversion Index, which combines multiple key valuation metrics, including the 200-week moving average and realized price, to rank Bitcoin's price historically. At $40,000, Bitcoin would register as a '0.4 event,' indicating it would fall within the 0.4th percentile of all daily closes, a level Check describes as 'below any meaningful deviation across all 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, although historically weak, remains within normal correction ranges. Check cautions that while there's no zero probability in markets, achieving a $40,000 Bitcoin price would indeed be a near-unprecedented outcome.