Veteran on-chain analyst Willy Woo has issued a stark warning, stating that Bitcoin's (BTC) bear market trend is strengthening and the asset is approaching the second phase of a multi-stage downturn. This forecast challenges persistent bullish narratives, suggesting the worst may still be ahead for the world's largest cryptocurrency.
In a series of posts on X on February 18, Woo outlined a three-phase bear market framework. He positioned the first stage as beginning in the third quarter of 2025, when liquidity first broke down and the price began to follow. The key signal, according to Woo, comes from volatility metrics used by quantitative analysts. He noted that Bitcoin enters a prolonged decline when volatility spikes upward, and that volatility is still climbing, indicating the bear trend is gaining ground. "In this phase, perma bulls will blindly say it’s a correction inside a broader bull market but will not give you any hard evidence of capital flowing in," Woo wrote.
Woo's internal liquidity models, released weekly to investors, reportedly match these volatility signals. He predicts the second phase of the bear market will commence when global equities begin to weaken. Due to its smaller size and higher sensitivity to liquidity shifts, Bitcoin often reacts faster than equities when capital exits markets. "Under this bear market framework, BTC is presently in Phase 1 and close to Phase 2," Woo stated.
He characterized the final, third phase as "the light at the end of the tunnel," predicting a turnaround in liquidity as capital outflows peak and stabilize. However, he warned that there could be one more price capitulation just before or immediately after this peak.
Not all analysts interpret the data as outright bearish. Axel Adler Jr. pointed out that Bitcoin's Entity-Adjusted Liveliness metric peaked in December 2025 and has started declining, a pattern seen in past accumulation periods. Separately, GugaOnChain focused on valuation, noting that the MVRV Z-Score reading near 0.48 places Bitcoin close to historical accumulation zones rather than overheated territory, suggesting some investors may see current prices as discounted.
