Despite Bitcoin's recent 15% gain this month, some industry experts remain unconvinced that the cryptocurrency has escaped the bear market that began in October, given it is still 40% below its record high. Some forecasters predict a potential drop to $40,000, a 70% decline from its all-time high, with analyst James Check deeming such a move statistically extraordinary, though not impossible.
Check references the Bitcoin Mean Reversion Index, which averages key valuation metrics and ranks 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 is around the 31.5th percentile, historically weak but within normal correction ranges, leading Check to conclude that a $40,000 price would be 'a near-unprecedented outcome'.