Bitcoin Recent gains — they’re up nearly 15% this month — aren’t enough to convince some industry observers that the largest cryptocurrency has escaped the bear market it entered in October. It is, after all, still 40% below its record.
There could be larger declines to come, with some unidentified forecasters predicting a drop to as low as $40,000, a 70% drop from its all-time high. The figure comes from Bitcoin analyst James Check, who says such a move is unlikely. While it’s not impossible, he said in an article on X, it would be statistically extraordinary.
“Just to make a point, for the bears who want to see $40,000.
You might well be right. However, consider that on a mean reversion basis, averaged over nine anchors (a mix of technical, onchain, trending, fast, slow, etc.), this is a Q 0.4 event.
Less than $2 Bitcoin in 2011.”
After climbing more than $126,000 in October, bitcoin slid more than 50% to around $60,000 in February before stabilizing. It was trading at nearly $78,000 on Friday.
Speaking to the Bears, Check said their predictions deserve further scrutiny.
Check out the Bitcoin Mean Reversion Index, a composite model that averages several key valuation metrics including the 200-week moving average, realized price, power law trend, and a number of volume-weighted average price metrics. The index ranks the price of Bitcoin on a historical percentile basis.
When modeled at $40,000, bitcoin is recorded as a “0.4 event,” meaning it would fall into the 0.4th percentile of all daily closes.
“This is below any significant deviation on all major anchors,” Check said.
For context, Check says this would equate to bitcoin trading below $2 in 2011 on a relative basis. On the other hand, the current price is around the 31.5th percentile, historically low but within normal correction margins.
“There is no zero probability in the markets,” Check added, “but it would be an almost unprecedented outcome.”
