The next crypto bear market could be particularly brutal and driven by a business cycle downturn that has never been seen in crypto before, according to analyst Willy Woo.
The next bear market "will be defined by another cycle people forget about," Woo stated on Monday.
He previously explained that the market had two cycles superimposed: one based on the Bitcoin halving events every four years and another based on the M2 global money supply. Central banks inject M2 debasement in four-year cycles, and both have historically superimposed.
However, Woo asserts that the next bear market will be defined by the business cycle. He noted that the last significant business cycle downturns occurred in 2008 and 2001, predating the existence of crypto markets.
"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 and Their Impact on Liquidity
A business cycle downturn is characterized by economic contraction, marked by declining GDP, rising unemployment, falling consumer spending, and a slowdown in business activity. This period is commonly referred to as a recession and typically follows phases of economic expansion.
Woo's analysis highlights that crypto markets are not isolated from these broader economic trends. They are significantly influenced by business cycles, particularly through their effect on liquidity.
The 2001 business cycle downturn, often called the "dot-com bubble," saw a rise in unemployment and a 50% decrease in U.S. stock markets (S&P 500) over two years. This downturn was precipitated by the collapse of overvalued tech companies and excessive speculation.
In 2008, the "financial crisis" resulted in a substantial GDP contraction, a surge in unemployment, and a 56% drop in the S&P 500. This crisis was triggered by issues within the subprime mortgage market, a collapse in the banking system, and a credit freeze.
Understanding Bear Market Timing
The National Bureau of Economic Research (NBER) monitors four primary indicators to identify recessions: employment, personal income, industrial production, and retail sales.
While there was a brief spike in early 2020 due to pandemic-induced lockdowns, resulting in an extremely short recession, there is currently no imminent threat of a recession, although elevated risk persists.
This economic cycle has also been complicated by the introduction of trade tariffs, which have already impacted growth in the first half of 2025 and are projected to continue suppressing GDP growth through the first half of 2026.
Woo concluded that markets are speculative, meaning they price in future events, including changes in M2 money supply. He stated, "Either BTC is saying to the global markets the top is in, or BTC is going to catch up."