Despite Bitcoin's recent 15% gain this month, some industry observers remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it still lags 40% behind its record high. Some forecasters predict a potential drop to as low as $40,000, a 70% decline from its all-time peak. According to analyst James Check, such a move, although not impossible, would be statistically remarkable.
Check referenced the Bitcoin Mean Reversion Index, which combines key metrics like the 200-week moving average and realized price to rank Bitcoin's price historically. At $40,000, Bitcoin would be at the 0.4th percentile of all daily closes, significantly below any meaningful deviation.
This would be equivalent to Bitcoin trading at approximately $2 in 2011 on a relative basis, far below its current price, which sits around the 31.5th percentile. While Check acknowledges that no market event has zero probability, he considers a drop to $40,000 a nearly unprecedented outcome.