- Bitwise CIO Matt Hougan believes Bitcoin could ultimately benefit whether artificial intelligence drives an economic boom, triggers a financial crisis or delivers moderate growth.
- Hougan argues that an AI-driven recession could lead to government bailouts and monetary expansion, potentially supporting Bitcoin after an initial selloff.
- Continued institutional adoption, ETF inflows and Bitcoin’s fixed supply remain central to his long-term bullish outlook.
Bitwise Chief Investment Officer Matt Hougan believes Bitcoin could emerge stronger regardless of how the artificial intelligence boom develops.
In a Wednesday note to clients, Hougan outlined several potential economic scenarios involving AI, arguing that each could eventually create favorable conditions for Bitcoin.
His outlook includes an AI investment bubble bursting, a productivity-driven economic expansion and a more moderate growth environment.
While Hougan expects Bitcoin to benefit over the long term, he acknowledged that some scenarios could trigger significant short-term losses.
AI Market Crash Could Trigger Bitcoin Rally
Hougan warned that a collapse in AI-related investments could create financial instability across multiple industries.
In this scenario, data-center borrowers could default on their obligations, while insurance companies holding billions of dollars in AI-linked bonds could face substantial losses.
The resulting financial pressure could push the U.S. economy into a recession resembling the 2008 financial crisis.
However, Hougan believes the government would almost certainly intervene because of AI’s strategic importance to the United States.
He estimated the probability of a bailout following such a crisis at nearly 100%.
Bitcoin could initially decline alongside other risk assets before recovering as government spending and monetary expansion increase liquidity.
Hougan also argued that if the Federal Reserve raises interest rates enough to trigger a recession, the eventual policy response could benefit Bitcoin.
Alternatively, if inflation accelerates without aggressive rate increases, investors could increasingly view Bitcoin as a store of value.
Bitcoin Could Benefit From AI Economic Boom
Hougan also explored a scenario in which artificial intelligence delivers substantial productivity gains and accelerates economic growth.
He described this potential environment as “superabundance,” where AI dramatically reduces costs across industries including software development, legal services, design and pharmaceuticals.
Despite these productivity improvements, certain assets would remain inherently scarce.
Hougan identified Bitcoin, gold, valuable artwork and desirable real estate as examples of assets that could appreciate as economic abundance increases.
Bitcoin’s fixed maximum supply of 21 million coins supports this argument, as additional demand cannot be met by increasing its ultimate supply.
Institutional Adoption Supports Long-Term Outlook
Hougan’s third scenario involves relatively stable economic conditions, with growth around 3% and interest rates near 4%.
Under this outcome, AI-related debt obligations remain manageable and the economy experiences something approaching a soft landing.
Hougan believes Bitcoin could continue appreciating through existing demand drivers, including spot Bitcoin ETF inflows, financial advisor adoption and growing corporate and sovereign treasury allocations.
However, he cautioned that Bitcoin’s long-term potential does not eliminate short-term volatility.
He pointed to Bitcoin’s roughly 50% decline during the COVID-related market panic in early 2020 as an example of how sharply prices can fall during financial stress.
Hougan also acknowledged potential threats from quantum computing, coordinated government restrictions and a return to fiscal austerity.
Despite those risks, he maintained that multiple economic paths could ultimately support higher Bitcoin prices.
