Despite Bitcoin's recent 15% monthly gain, some industry experts remain unconvinced that the cryptocurrency has overcome the bear market that began in October, given its current price is still 40% below its all-time high. Some forecasters are predicting a potential drop to $40,000, representing a 70% decline from its peak.
However, analyst James Check believes such a scenario is highly improbable, albeit not impossible, describing it as statistically extraordinary. Check references the Bitcoin Mean Reversion Index, which combines multiple valuation metrics, including the 200-week moving average and volume-weighted average price measures.
According to this index, a $40,000 price point would place Bitcoin in the 0.4th percentile of all daily closes, significantly below any meaningful historical deviation. For perspective, Check notes this would be equivalent to Bitcoin trading at under $2 in 2011, relative to its price at the time. In contrast, the current price is around the 31.5th percentile, which, although historically weak, falls within typical market correction ranges. Check cautions that while no market event has zero probability, a $40,000 Bitcoin price would be a nearly unprecedented outcome.