Bitcoins recent gains — it’s added 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. After all, it is still 40% below the record.
Deeper declines could be coming, with some unidentified forecasters predicting a drop to as low as $40,000, a 70% drop from the all-time high. The figure comes from bitcoin analyst James Check, who says such a move is unlikely. While not impossible, he said in a post on X, it would be statistically extraordinary.
“Just to emphasize, for those bears who would like to see $40,000.
You may well end up right. However, consider that on an average reversion basis, averaged over nine anchors (a mix of technical, onchain, trend, fast, slow, etc.), that is a Q 0.4 event.
Lower than $2 Bitcoin in 2011.”
After climbing above $126,000 in October, bitcoin slipped more than 50% to around $60,000 in February before stabilizing. It traded near $78,000 on Friday.
In speaking with the bears, Check said their predictions warrant further investigation.
Check points for 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 targets. The index ranks bitcoin’s price on a historical percentile basis.
When modeled at $40,000, bitcoin registers as a “0.4 event,” meaning it will fall in the 0.4 percentile of all daily closes.
“It’s below any meaningful deviation across all major anchors,” Check said.
For context, Check says that would equate to bitcoin trading below $2 in 2011 on a relative basis. In contrast, today’s price is around the 31.5 percentile, historically weak but within normal correction intervals.
“There is no zero probability in markets,” added Check, “but this would be an almost unprecedented outcome.”
