Matt Hougan, the Chief Investment Officer at Bitwise, a crypto asset management firm, has shared an in-depth analysis claiming that Bitcoin’s price is poised for long-term growth, irrespective of the macroeconomic trends related to artificial intelligence (AI).
In a communication sent to investors on the 15th (local time), Hougan posited that whether AI leads to a period of hyper-abundance, prompts an investment bubble collapse and recession, or sees steady growth akin to current rates, most scenarios suggest an upward trajectory for Bitcoin’s value.
He compared this situation to “choose-your-own-adventure” books from his childhood, noting that while the narrative may diverge based on choices, it often reaches a similar conclusion. Hougan indicated that the current spectrum of macroeconomic forecasts is the broadest he has encountered in his investment career. Optimistic views suggest that AI could double gross domestic product (GDP), while pessimistic predictions express fears about potential human extinction—views that diverge significantly.
In the first scenario, AI could herald a time of “hyper-abundance.” According to Hougan, if AI significantly boosts productivity and reduces costs associated with intellectual labor, it could lead to increased demand for uniquely scarce assets. Even with AI expanding the availability of knowledge and labor, the worth of assets that cannot be duplicated or created in larger quantities will likely rise. He highlighted coastal land, gold, and Bitcoin as examples of such limited assets.
The second scenario envisions a situation where a bubble in AI investments bursts, resulting in a recession reminiscent of the 2008 financial crisis. In this context, Bitcoin might initially drop alongside other risk assets. However, Hougan suggested that the American government would almost certainly intervene with substantial bailouts. He characterized the development of AI infrastructure as “the largest infrastructure investment in American history,” foreseeing massive government liquidity injections as essential to manage a bubble’s potential collapse.
“This is exactly the type of environment for which Bitcoin was created,” he asserted. As governments flood the economy with liquidity to stabilize the financial landscape, concerns about the devaluation of fiat currencies will intensify—benefiting Bitcoin with its fixed supply.
The third scenario depicts a pathway of consistent economic growth without extreme fluctuations. Assuming a GDP growth rate of about 3% and interest rates around 4%, Hougan is optimistic that Bitcoin can sustain its growth momentum. He anticipates continued inflows via exchange-traded funds (ETFs), growing acceptance among investment advisors, and continued actions by corporations and sovereign nations to incorporate Bitcoin into their financial reserves.
He pointed out that the ongoing rise in government debt will naturally help Bitcoin expand its investor base, even in the absence of significant macroeconomic shocks. “Bitcoin achieves success simply by existing,” Hougan summarized.
This analysis comes as anxieties around the macroeconomic landscape related to AI are on the rise. BlackRock’s CEO, Larry Fink, warned recently that a slowdown in data-center development could push the US economy toward recession. This suggests that investments in AI infrastructure have become a pivotal factor affecting the overall trajectory of the US economy, extending beyond growth in a particular tech sector.
Hougan recognized that his perspective is not without risks. He clarified that he is not claiming that Bitcoin’s price will unilaterally rise indefinitely. He reminded investors that during the market downturn induced by the COVID-19 pandemic in 2020, Bitcoin experienced a 50% decline in just a few days—only to rebound nearly twentyfold from its lows.
He also acknowledged risks not directly linked to macroeconomic shifts that could challenge his investment outlook. He pinpointed stringent Bitcoin regulations by governments around the world and advancements in quantum computing as significant risks. Specifically, the concern that quantum computers could potentially compromise the cryptographic integrity of older Bitcoin wallets is an emerging threat, with ongoing debates about whether AI might outpace encryption technologies before quantum computing becomes viable.
Despite these concerns, Hougan’s concluding message was clear. He emphasized to long-term investors that the major macroeconomic dilemmas “matter less than most believe,” asserting that, regardless of the direction the AI-era economy takes, Bitcoin’s attractiveness as a long-term investment is likely to grow.