- On-chain analysts predict that the bitcoin bear market is in its early phase, attributed to decreasing liquidity, rising volatility, and diminishing investor demand.
- Willy Woo warns that Bitcoin is in Phase 1 of a potential prolonged decline, with signs of demand exhaustion near the $70,000 price region reported by Glassnode.
- Increased volatility indicates structural stress in the market, and although short-term price recoveries occur, broader instability is evident.
The bitcoin bear market may be far from over, according to fresh analysis from on-chain experts and blockchain data firms who argue that the current downturn is only in its first phase. Despite brief price recoveries and pockets of optimism across crypto social media, leading indicators suggest that Bitcoin is facing mounting pressure from weakening liquidity, rising volatility, and fading investor demand. For many retail investors, the latest drop has revived painful memories of previous market cycles. Yet this time, analysts say the structure of the market looks different — and potentially more complex — than in prior downturns. On-chain analyst Willy Woo has issued a clear warning: Bitcoin remains in Phase 1 of a broader and potentially prolonged decline. Meanwhile, blockchain intelligence platform Glassnode reports visible signs of demand exhaustion, particularly around the $70,000 price region. Together, these signals paint a cautious picture of what may lie ahead in the ongoing bitcoin bear market.
Volatility Surges Signal Structural Weakness
Willy Woo’s latest assessment centers on volatility — a metric he considers one of the most reliable indicators of macro market direction. According to Woo, Bitcoin effectively entered a bear phase once volatility began accelerating upward. In quantitative analysis, volatility spikes often reflect structural stress beneath the surface of price action. While short-term rallies can occur, rising volatility generally confirms that broader instability is taking hold. Woo explains that volatility typically peaks around the midpoint or later stages of a market cycle. However, during the early phase of a downturn, volatility tends to trend upward persistently — signaling that investors are still adjusting to new liquidity conditions. He emphasizes that what markets are currently witnessing fits the early blueprint of a bitcoin bear market, not its final capitulation stage. Importantly, smaller volatility spikes often appear near major bottoms, representing panic-driven selling and forced liquidations. These fear-based moves usually accompany market-wide capitulation. But Woo argues that the data has not yet reached that definitive exhaustion point. Instead, volatility remains elevated and structurally rising — suggesting that deeper stress could still emerge.
A Three-Phase Framework for the Bitcoin Bear Market
Woo divides the broader downturn into three distinct phases.
Phase 1: Liquidity Weakens
According to Woo, Phase 1 began in the third quarter of 2025. During this period, on-chain liquidity indicators started to deteriorate. Capital inflows slowed, speculative momentum weakened, and Bitcoin’s price began reacting more sharply to macro shifts. Bitcoin, Woo notes, is smaller and more reactive than traditional equity markets. As a result, it often turns downward before stocks confirm broader risk-off behavior. Phase 1 reflects tightening liquidity and declining investor appetite for risk — conditions that are currently visible in internal flow models.
Phase 2: Equity Markets Confirm Risk-Off Sentiment
In Phase 2, Woo expects global stock markets to enter their own bearish phase. Stocks, being larger and slower-moving markets, typically confirm broader economic weakness after alternative assets have already reacted. If equities begin trending lower in a sustained way, it could validate that the broader macro environment has shifted toward defensive positioning. Woo warns that if this alignment occurs, the bitcoin bear market would move into a more synchronized global downturn.
Phase 3: Capitulation and Liquidity Stabilization
The final phase would begin when liquidity stabilizes and capital outflows peak. This stage is often characterized by final capitulation — when remaining speculative positions are flushed out and sellers become exhausted. Only then, Woo suggests, can a sustainable recovery take root. At present, his models show that the market is still navigating Phase 1 — meaning the process may be far from complete.
Derivatives Have Changed the Cycle
Woo also addressed questions regarding his past Bitcoin price projections. During the previous cycle, he had suggested that Bitcoin could reach between $200,000 and $300,000. That target never materialized. He now acknowledges that the rapid expansion of derivatives markets altered Bitcoin’s traditional four-year cycle dynamics. The introduction of more sophisticated hedging tools, leverage products, and institutional trading strategies has reshaped how capital flows through the ecosystem. Unlike earlier cycles driven primarily by spot demand, today’s market includes perpetual futures, options structures, and algorithmic liquidity providers. These tools can dampen upward momentum while accelerating downside moves during stress events. As a result, Woo expanded his analytical framework beyond pure on-chain metrics, incorporating internal liquidity models and macro-driven capital flows. This structural shift, he argues, is a critical factor in understanding the current bitcoin bear market.
Glassnode Reports Weak Demand Above $70,000
Independent data from Glassnode reinforces Woo’s cautionary outlook. According to the firm, every Bitcoin rally above the $70,000 mark since early February has encountered weak demand. Even during periods when traders realized over $5 million per hour in profits, prices failed to maintain upward momentum. In previous euphoric stages — particularly during Q3 2025 — realized profits surged between $200 million and $350 million per hour. Those levels reflected aggressive speculative participation and strong buyer absorption. Today’s environment looks dramatically different. Thin liquidity and reduced enthusiasm make sustained moves into the $70,000 to $80,000 range increasingly difficult. Glassnode characterizes the current setup as demand exhaustion rather than accumulation. In simpler terms: buyers are not stepping in with conviction. This weak demand environment continues to weigh heavily on sentiment within the bitcoin bear market.
Investor Sentiment Remains Divided
Crypto investor Ran Neuner recently highlighted another unusual characteristic of the current cycle: the absence of a blow-off top. Historically, major Bitcoin cycle peaks have been marked by explosive retail enthusiasm, viral media coverage, and widespread speculative mania. This time, that kind of euphoric climax never fully materialized. Instead, the narrative remains fragmented. Concerns about regulatory clarity, macroeconomic tightening, and emerging technological threats — including quantum computing risks — have kept investors cautious. Neuner disclosed that he reduced his exposure and consolidated his portfolio into 11 positions designed to withstand further downside volatility. This defensive positioning mirrors broader market psychology: investors are not panicking, but they are far from aggressively bullish.
Quantum Computing Adds a New Layer of Risk
One of the more controversial topics influencing long-term sentiment is the potential impact of quantum computing on Bitcoin’s cryptographic security. Woo has warned that markets may already be pricing in the possibility of a so-called “Q Day” — a hypothetical moment when quantum computers could break current public-key encryption standards. While such a breakthrough may still be years away, investor awareness of the risk appears to have increased.
Woo noted that after concerns about quantum vulnerability became more widely discussed, the long-standing Bitcoin-to-gold valuation trend shifted. Bitcoin had historically outperformed gold in relative strength metrics, but that relationship has shown signs of inversion. If investors begin treating Bitcoin less as a digital safe haven and more as a high-risk speculative asset vulnerable to technological disruption, it could reshape long-term capital allocation patterns. Although many cryptographers argue that Bitcoin could upgrade its security before quantum threats materialize, uncertainty alone can affect market behavior — especially during a fragile bitcoin bear market.
Liquidity Remains the Central Variable
Across all perspectives — volatility metrics, on-chain flow data, demand exhaustion, and macro alignment — one theme stands out: liquidity. Liquidity drives bull markets. Its absence defines bear markets. In prior cycles, central bank stimulus, retail speculation, and venture capital funding created powerful inflows. Today’s environment is marked by tighter financial conditions and more cautious capital deployment. Without renewed liquidity expansion, analysts say, upside breakouts may continue to fade. For investors hoping that the worst is already behind the market, Woo’s framework offers a sobering reminder: early-stage downturns often feel deceptively manageable before deeper stress emerges.
The current bitcoin bear market shows multiple signs of structural weakness, according to leading on-chain analysis and blockchain data research. Rising volatility, weakening liquidity, stalled demand above key price levels, and evolving macro risks all suggest that Bitcoin may still be navigating the early stages of a broader downturn. While long-term believers remain confident in Bitcoin’s fundamentals, short- to mid-term indicators caution that further turbulence cannot be ruled out. Until liquidity stabilizes and capitulation signals emerge clearly, analysts argue that patience — rather than aggressive accumulation — may define the next chapter of this market cycle.
Disclaimer: CryptopianNews shares this for learning and info only. It’s not meant to be financial or investment advice. Crypto markets change a lot and move quickly. Investing in them can be risky. You should always look into things yourself. Talk to a trained financial advisor before making any choices about investing.
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