I just came across an interesting market analysis by Willy Woo that made me think. The guy is currently warning about an intensifying bear market in Bitcoin, which isn't exactly pleasant for many long-position holders.

What fascinates me about his analysis: he places great emphasis on volatility as a key indicator. That’s not unimportant for quant analysts trying to identify market trends. The logic behind it is actually quite understandable – a sudden spike in volatility can signal the start of a bear market. If this increased volatility then persists or even increases, it suggests that the bear trend is intensifying further.

But here’s where it gets interesting: Woo believes that the bear market only loses strength when volatility reaches its peak in the later stages. This practically means that extreme fluctuations occur at the end of a bear market – typically at macroeconomic lows, when the market essentially gives up and capitulates.

For me personally, this is an important reminder to not only watch the price but also keep an eye on volatility patterns. The bear market could last a while longer if volatility doesn’t show these typical peak values. Long-term investors should understand these dynamics.