Analysts warn Bitcoin is nearing Phase 2 bear market
Bitcoin may be nearing “Phase 2” of a bear market, a stage often associated with rising volatility and tighter on-chain liquidity. As reported by CryptoPotato, on-chain analyst Willy Woo outlined a three-phase pattern in which Phase 1 began in Q3 2025 amid a liquidity breakdown and price weakness, with recent volatility and liquidity signals pointing toward Phase 2.
In this framework, Phase 2 typically aligns with broader risk-off in equities, deepening drawdowns across crypto as capital exits high-beta assets. Bernstein characterizes the current stretch as a “short-term crypto bear cycle” rather than a structural failure, implying market structure could remain intact even as prices and liquidity reset.
Why it matters: signals and immediate market impact
What matters now is the speed of the volatility change and its spillover into liquidity. According to TradingView NewsBTC coverage, Bitcoin has shifted from relative calm to a renewed volatility regime, with price swings accelerating to levels not seen since last year. Such regime shifts can tighten liquidity, widen spreads, and stress leveraged positioning across venues.
Survey and on-chain research add to that picture, pointing to softer demand and an early-stage bear backdrop. “Bitcoin appears to be in the very early stages of a bear market, with weakening demand being key,” said Julio Moreno, Head of Research at CryptoQuant.
At the time of this writing, Bitcoin is around $67,531, and the short-term dashboard reads Bearish sentiment with very high 30-day volatility near 11.97%. The 14-day RSI is roughly 36, while the spot price sits below the 50- and 200-day simple moving averages, a configuration that often consolidates or whipsaws rather than trends. These are descriptive indicators; they can change quickly and do not imply outcomes.
Key signals: volatility, on-chain liquidity, whale behavior
Whale distribution versus retail accumulation is a late-bear dynamic to watch. As reported by CCN, large holders have been trimming exposure while smaller accounts buy dips, a pattern that has historically extended bear phases rather than ended them. The same analysis notes Bitcoin’s Sharpe ratio slipping into zones associated with late-bear conditions, suggesting a less favorable risk-adjusted profile until volatility and returns stabilize.
On-chain liquidity tends to thin when volatility rises, making swings sharper and liquidations more likely as order books lose depth and resting bids pull back. If that coincides with a broader risk-off in equities, Phase 2 conditions can emerge quickly, with temporary capitulation not ruled out in analyst frameworks. Conversely, clear improvements in spot liquidity and volatility compression would argue against further phase progression.
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