Next Crypto Bear Market May Come From Business Cycle Decline, Analyst Says

The crypto market has experienced multiple downturns in the past, often following a familiar pattern involving Bitcoin halvings, liquidity declines, and macroeconomic problems. Yet analyst Willy Woo suggests the next major bear market could unfold differently. He expects the broader economic cycle to influence market direction more than the traditional four-year cycle.

How Could the Next Crypto Bear Market Unfold?

Crypto has never gone through a full business cycle downturn. Previous major global recessions, such as the dot-com crash in 2001 and the financial crisis in 2008, took place before Bitcoin existed. Woo notes that this makes the current period particularly uncertain.

In the past, the market’s patterns were influenced by Bitcoin halving events and expansions in the M2 money supply, which measures overall liquidity from central banks. When these factors aligned, liquidity flowed into the market, driving rallies. When monetary policy tightened, markets slowed.

Woo argues that the current situation is different. If the global economy slows and enters a contraction, crypto could face challenges similar to those experienced by tech stocks in the early 2000s. “If we experience a business cycle downturn like in 2001 or 2008, it will test Bitcoin’s behavior. Will it fall like tech stocks or act more like gold?” he asked.

This question reflects the ongoing uncertainty about Bitcoin’s nature. If it mirrors equities, the next decline could be more severe than anything the digital asset market has previously experienced.

The Effect of Business Cycles on Crypto Markets

A business cycle downturn usually brings slower GDP growth, higher unemployment, and weaker consumer spending. Liquidity is reduced, capital becomes less accessible, and speculative investments often suffer. Even decentralized crypto markets are affected. They respond to changes in global liquidity. When banks lend less or investors move to safer assets, digital markets feel the impact quickly.

Woo’s comments emphasize that broader economic trends can matter more than crypto-specific factors. The dot-com crash cut the S&P 500 by about 50% from 2000 to 2002. The 2008 financial crisis caused a similar fall. If comparable pressure comes back, crypto may also face substantial losses.

The only time crypto faced major economic problems was during the COVID-19 pandemic. In early 2020, global markets crashed, and cryptocurrencies fell sharply. By the end of 2020, the market had recovered, and crypto also bounced back, with Bitcoin reaching a new all-time high. This shows that the crypto market largely follows overall market patterns, including periods of turmoil.

Liquidity is currently more constrained than in previous crypto cycles. Central banks are focused on controlling inflation while promoting growth, and high levels of debt limit government spending. As a result, there is little room for the large stimulus measures that have often supported crypto rallies in the past.

When Could the Next Recession Happen?

Forecasting the next phase of economic decline is famously challenging. The National Bureau of Economic Research tracks four main measures: employment, personal income, industrial production, and retail sales. Right now, none show a recession is coming, but warning signs are increasing.

Trade wars and slower global growth have already slowed momentum in early 2025. Experts predict these pressures may persist into 2026, keeping investors cautious. Meanwhile, consumer savings are decreasing and corporate profits are leveling off, both signs of early economic stress.

According to Woo, markets often anticipate changes before they show in the data. They are speculative and factor in expected events, including changes in the M2 money supply. A slowdown in Bitcoin could be an early sign of wider economic weakness.

What Does It Mean for Investors?

An economic slowdown may reveal the market’s reliance on global liquidity and investor confidence. But this is not entirely negative. Times like this often remove over-speculation, push for innovation, and strengthen long-term confidence.

Some say Bitcoin needs a real test against the economy to prove its value beyond speculation. At present, the absence of a looming recession offers crypto some relief, but the influence of macroeconomic factors on digital assets remains significant.