Despite Bitcoin's recent 15% gain this month, some industry experts remain skeptical that it has escaped the bear market that began in October, given that it still lags 40% behind its all-time high. Certain forecasters have even predicted a potential drop to as low as $40,000, which would represent a 70% decline from its peak. However, analyst James Check considers such a move statistically extraordinary, albeit not impossible.
Check references the Bitcoin Mean Reversion Index, which combines key valuation metrics to rank Bitcoin's price historically. At $40,000, Bitcoin would register as a 0.4th percentile event, indicating an extremely rare occurrence. For perspective, Check notes this would be equivalent to Bitcoin trading below $2 in 2011 on a relative basis, whereas its current price is around the 31.5th percentile, a historically weak but relatively normal correction range.
Check emphasizes that while no event has zero probability in markets, reaching $40,000 would be a nearly unprecedented outcome.