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Analyst Willie Wu has warned that Bitcoin’s price is entering the second phase of a bear market in what he describes as a multi-stage model, suggesting that while some optimistic narratives continue to prevail in the market, the worst may not be over yet.
Analyst Wu said that the first stage of the current downward cycle will begin in the third quarter of 2025, with liquidity declining and prices beginning to reverse downward.
Based on his analysis of volatility indicators used by quantitative traders, Wu explained that a sustained rise in volatility is a sign of a deepening negative trend.
He believes that many optimists believe that the current trend is just a correction in the broader rising market, but there is no clear evidence that capital flows are returning.
Wu noted that his internal model for measuring liquidity is consistent with volatility signals and expects the second phase to actually begin when global stock markets decline, as Bitcoin tends to react faster to liquidity changes due to its smaller size and higher sensitivity.
As for phase three, he described it as the light at the end of the tunnel, with capital outflows peaking before stabilizing, but warned there could be a final wave of price capitulation before recovery.
On the other hand, not all analysts share this entirely pessimistic view.
Axel Adler Jr pointed out that the real adjustment vitality index peaked in December 2025 and then began to decline, a pattern historically associated with long-term accumulation.
GugaOnChain also explained that the current MVRV Z-score is close to 0.48, placing Bitcoin in historical consolidation territory rather than price bubble territory, which may mean that some investors believe that the current price is a discount compared to previous buying averages.
Between warnings of a deepening bear market and valuation signals hinting at accumulation opportunities, Bitcoin’s path remains dependent on global liquidity developments and the next phase of stock market performance.
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