Analyst Warns Bitcoin Is Approaching A Second Phase of Bear Market
Bitcoin is nearing the second phase of a bear market, according to a recent analysis, with significant volatility and liquidity trends indicating further risks.
Veteran on-chain analyst Willy Woo has cautioned that the Bitcoin (BTC) market is worsening in its bear trend and approaching the second phase of a multi-stage downturn.
The forecast undermines the ongoing bullish narratives, hinting that further declines could be on the horizon for the world’s leading cryptocurrency.
End of Phase 1 as Volatility Signifies Trouble
Woo detailed a three-phase bear market framework in posts on X on February 18, stating that Bitcoin is at a critical point. He highlighted that the first phase began in Q3 2025, when liquidity started to fall and prices began to mirror that decline.
He pointed out that a key indicator is volatility metrics from quantitative analysts, noting that Bitcoin often enters a sustained downturn when volatility spikes. The current trends show volatility still on the rise, suggesting that the bear market is intensifying.
“In this phase, perma bulls will blindly say it’s a correction inside a broader bull market but will not provide any hard evidence of capital inflows,” Woo expressed.
According to his liquidity models, which he shares weekly with investors, the current data supports the volatility signals. He believes that the second phase will commence as global equities start to lose strength.
The largest cryptocurrency tends to react more swiftly than equities to market capital exits due to its smaller size and greater sensitivity to liquidity changes.
“Under this bear market framework, BTC is presently in Phase 1 and close to Phase 2,” Woo stated.
He described the concluding phase as “the light at the end of the tunnel,” forecasting a turnaround in liquidity with capital outflows peaking before stabilizing. However, he cautioned that one last price capitulation might occur just before or after this peak.
Mixed Signals for Long-Term Outlook
Notably, not all analysts interpret the current data as distinctly bearish. In a recent statement, Axel Adler Jr. indicated that Bitcoin’s Entity-Adjusted Liveliness metric peaked in December 2025 and has begun declining, a trend observed during historical accumulation phases lasting between 1.1 and 2.5 years. This metric tracks BTC movement relative to holding periods and typically decreases after market distributions.
Another analyst, GugaOnChain, highlighted valuation, using the MVRV Z-Score developed by Murad Mahmudov and David Puell. They noted that the current score near 0.48 positions Bitcoin close to historical accumulation areas rather than overheated zones. This suggests that some investors may view current price levels as advantageous compared to average acquisition costs.
