The next crypto bear market could be especially severe and driven by a type of economic downturn the industry has never experienced before, says analyst Willy Woo.
According to Woo, the coming bear phase “will be defined by another cycle people forget about.” He noted that past crypto cycles have largely followed two overlapping patterns: Bitcoin’s four-year halving events and global M2 money supply expansions.
“Central banks inject M2 debasement in four-year cycles, and both have overlapped,” Woo explained.
This time, however, Woo believes the driving force will be the broader business cycle. He pointed out that the last major business cycle downturns occurred in 2001 and 2008—long before crypto markets even existed.
“If we get a biz cycle downtown, like 2001 or 2008, it will test how BTC trades. Will it drop like tech stocks or will it drop like gold?”
Business cycles could tighten liquidity
A business cycle downturn—commonly called a recession—occurs when economic activity contracts: GDP declines, unemployment rises, consumer spending drops, and business output slows.
Willy Woo argues that crypto markets are not insulated from these macroeconomic forces. Instead, they move in tandem with broader economic cycles, especially through changes in liquidity.
The 2001 downturn, known as the dot-com bubble, led to a sharp rise in unemployment and a roughly 50% decline in the S&P 500 over two years, triggered by the collapse of overvalued tech stocks and rampant speculation.
In 2008, the global financial crisis brought an even steeper economic contraction, with GDP falling sharply, unemployment surging, and the S&P 500 plunging 56%. The crisis stemmed from a meltdown in subprime mortgages, banking failures, and a widespread credit freeze.
Bear market timing
To identify recessions, the National Bureau of Economic Research (NBER) monitors four key indicators: employment, personal income, industrial production, and retail sales.
While a brief recession occurred in early 2020 during the pandemic lockdowns, it was short-lived. Currently, there is no clear sign of an imminent downturn—though elevated risks persist.
This cycle, however, is more complex. The introduction of trade tariffs has already slowed growth in the first half of 2025 and is expected to continue weighing on GDP through at least mid-2026.
Woo concluded that markets are speculative, meaning they price in future events, including M2 money supply. “Either BTC is saying to the global markets the top is in, or BTC is going to catch up,” he said.
