Cowen explains why current market behavior makes more sense when viewed through the lens of a late business cycle.
Key Points
Key Highlights:
- Bitcoin still followed its usual pattern: cycle top in Q4 2025 (post-halving year)
- But unlike past cycles, top came with low hype (apathy), not euphoria
- Crypto weakness started earlier:
Key Highlights:
- Social interest declining since 2021
- Altcoins underperforming for years
- In a late business cycle, money moves to safer assets:
Key Highlights:
- Altcoins → Bitcoin → Stocks → Gold
- This explains:
Key Highlights:
- No altcoin season
- Bitcoin underperforming stocks
- Stocks now weakening vs gold
- Liquidity is tightening and economic uncertainty is rising
- Labor market is weakening:
Key Highlights:
- Job growth slowing sharply
- Close to contraction levels
- Recessions typically end business cycles, but timing is uncertain
- Markets are forward-looking:
Key Highlights:
- Stocks drop first → layoffs come later → recession follows
Final Takeaway
We are likely in a late business cycle where risk is moving downward. Until a recession resets the system, expect weaker assets to continue underperforming despite short-term rallies.
