Bitwise CIO argues bitcoin will benefit whether AI booms or busts

Bitwise Chief Investment Officer Matt Hougan argued in a Wednesday note to clients that bitcoin could ultimately benefit across three macroeconomic outcomes: an AI-driven economic boom, a collapse of AI investment, or modest growth, according to The Block. Hougan described an AI crash scenario in which data-center borrowers default, insurance companies holding billions of dollars in AI-linked bonds come under pressure, and the economy enters a recession resembling 2008. He put the odds of a subsequent government bailout at "nearly 100%," given the geopolitical importance of AI, and expects bitcoin to fall initially before recovering to "rally hard" as money supply expands. "Because the AI buildout is the biggest infrastructure investment in the history of America, the resulting bailout is the biggest as well," he wrote. A Federal Reserve rate hike sufficient to trigger recession would produce a similar outcome, while inflation without hikes would, in his view, drive more investors toward bitcoin as a store of value.

In the AI boom case, which Hougan calls "superabundance," productivity and GDP rise sharply and software, legal work, design, pharmaceuticals and diagnostics become much cheaper. Scarce assets, including waterfront land, great art, gold and bitcoin, would still command higher values in his view. In a third scenario, the economy "muddles along" with 3% growth and 4% interest rates, AI-linked debt is serviced, and the economy achieves "something approaching a soft landing." Bitcoin's existing demand sources, including ETF flows, advisor adoption and corporate and sovereign balance-sheet allocations, would persist in that case. "Bitcoin wins by showing up," Hougan said.

Hougan said "for bitcoin investors, what happens with AI doesn't matter over the long term," adding, "every path ultimately ends with bitcoin higher." He cautioned that the path would not be linear, pointing to bitcoin's 50% decline within days during the early-2020 COVID panic, and noted that some scenarios involve a difficult stretch before recovery. He identified quantum computing threats, a coordinated government crackdown, and Western governments returning to fiscal austerity as risks that could undermine the thesis, adding, "I think those are unlikely, but they're not impossible." Hougan had previously called crypto a "contrarian bet" in June while investors favored AI stocks, and Bitwise Senior Investment Strategist Juan Leon told The Block in July that bitcoin's price floor was rising despite the AI boom and regulatory delays.