Crypto Bear Market May Face Unprecedented Challenges Amid Economic Cycles

According to Cointelegraph, analyst Willy Woo has suggested that the upcoming crypto bear market could be particularly severe, driven by a business cycle downturn that the crypto industry has not previously experienced. Woo highlighted that previous bear markets were influenced by Bitcoin halving events and changes in the global M2 money supply, which are typically injected by central banks in four-year cycles. However, Woo believes the next downturn will be shaped by broader business cycles, similar to those seen in 2001 and 2008, before the advent of crypto markets. Woo explained that a business cycle downturn, often referred to as a recession, involves economic contraction characterized by declining GDP, rising unemployment, reduced consumer spending, and slowed business activity. He emphasized that crypto markets are not isolated and are susceptible to these economic cycles, particularly through their impact on liquidity. Historical downturns, such as the dot-com bubble in 2001 and the financial crisis in 2008, resulted in significant stock market declines and economic challenges, which could similarly affect crypto markets. The National Bureau of Economic Research (NBER) identifies recessions using indicators like employment, personal income, industrial production, and retail sales. While there was a brief recession in early 2020 due to pandemic-induced lockdowns, no immediate recession threat is currently evident, though risks remain elevated. Additionally, trade tariffs have complicated the current cycle, impacting GDP growth in 2025 and expected to continue into 2026. Woo concluded that markets are speculative, pricing in future events, including changes in the M2 money supply, and suggested that Bitcoin may either be signaling a market top or preparing to align with broader economic trends.