Key Takeaways
- • Bitwise CIO Matt Hougan argues in an investor note published Wednesday that Bitcoin benefits across nearly every macro scenario, using a "Choose Your Own Adventure" framing in which different economic paths converge on the same outcome.
- • In an AI "superabundance" scenario, Hougan says value migrates to scarce assets such as waterfront land, gold, and Bitcoin.
- • In an AI bubble burst leading to a 2008-style recession, Hougan puts the odds of a government bailout and money-printing at "nearly 100%," which he describes as the environment Bitcoin "was built for."
- • Hougan acknowledges risks including a 50% Bitcoin drop during the 2020 COVID panic, a global government crackdown, and quantum-computing threats to older wallets, while concluding macro factors "matter less than most people think" for long-term investors.
Summary
Bitwise Chief Investment Officer Matt Hougan contends that Bitcoin is positioned to benefit regardless of how the artificial intelligence trade plays out, according to a note to investors published Wednesday. Hougan described the current macro environment as the widest range of outcomes he has seen in his career, with commentators split between AI doubling GDP and AI causing human extinction. He framed his analysis around three paths, drawing on the "Choose Your Own Adventure" books, where divergent choices lead to the same ending.
In the first scenario, AI delivers "superabundance," driving productivity gains and making intelligence-based work inexpensive. Hougan argues that this abundance would raise the value of genuinely scarce assets, including waterfront land, gold, and Bitcoin, because they cannot be reproduced.
In the second scenario, the AI bubble bursts and triggers a 2008-style recession. Hougan acknowledges that Bitcoin would initially sell off alongside other risk assets, but he argues a government bailout would follow. Given that the AI buildout is "the biggest infrastructure investment in the history of America," he expects the resulting money-printing to be substantial, putting the probability of a bailout at "nearly 100%."
The third scenario is a muddle-through with roughly 3% growth and 4% rates, in which Bitcoin continues to benefit from ETF flows, advisor adoption, and corporate and sovereign balance-sheet allocations as government debt grows. "Bitcoin wins by showing up," he wrote.
Hougan qualified the thesis. He noted Bitcoin does not rise in a straight line, citing a roughly 50% decline within days during the 2020 COVID panic before a rebound of about 20-fold. He also identified non-macro risks that could break the thesis, including a global government crackdown and the quantum-computing threat to older wallets, even as researchers debate whether AI could break crypto encryption before quantum computers arrive.
The memo follows warnings from BlackRock CEO Larry Fink, who said this week that a halt to data center construction could push the U.S. into recession, underscoring how closely AI infrastructure and the broader economy are linked.
In the first scenario, AI delivers "superabundance," driving productivity gains and making intelligence-based work inexpensive. Hougan argues that this abundance would raise the value of genuinely scarce assets, including waterfront land, gold, and Bitcoin, because they cannot be reproduced.
In the second scenario, the AI bubble bursts and triggers a 2008-style recession. Hougan acknowledges that Bitcoin would initially sell off alongside other risk assets, but he argues a government bailout would follow. Given that the AI buildout is "the biggest infrastructure investment in the history of America," he expects the resulting money-printing to be substantial, putting the probability of a bailout at "nearly 100%."
The third scenario is a muddle-through with roughly 3% growth and 4% rates, in which Bitcoin continues to benefit from ETF flows, advisor adoption, and corporate and sovereign balance-sheet allocations as government debt grows. "Bitcoin wins by showing up," he wrote.
Hougan qualified the thesis. He noted Bitcoin does not rise in a straight line, citing a roughly 50% decline within days during the 2020 COVID panic before a rebound of about 20-fold. He also identified non-macro risks that could break the thesis, including a global government crackdown and the quantum-computing threat to older wallets, even as researchers debate whether AI could break crypto encryption before quantum computers arrive.
The memo follows warnings from BlackRock CEO Larry Fink, who said this week that a halt to data center construction could push the U.S. into recession, underscoring how closely AI infrastructure and the broader economy are linked.
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