Despite bitcoin's recent gains of nearly 15% this month, some industry experts remain unconvinced that the largest cryptocurrency has escaped the bear market that began in October, given it still lags 40% behind its record high. Some forecasters have even predicted a potential drop to as low as $40,000, a steep 70% decline from its all-time high. Bitcoin analyst James Check considers such a move unlikely, describing it as statistically extraordinary, though not impossible.
Check's assessment is based on the Bitcoin Mean Reversion Index, which combines multiple key valuation metrics to rank bitcoin's price historically. A price of $40,000 would place bitcoin in the 0.4th percentile of all daily closes, an outcome Check describes as 'below any meaningful deviation' and comparable to bitcoin trading at $2 in 2011 on a relative basis. Today's price, by contrast, is around the 31.5th percentile, weak historically but within normal correction ranges.
While Check acknowledges that no market event has zero probability, he views a drop to $40,000 as a 'near-unprecedented outcome'.