TL;DR
Matt Hougan believes Bitcoin could benefit from both an AI-driven economic boom and the bursting of an artificial intelligence investment bubble.
If AI investments trigger a financial crisis, Hougan expects monetary stimulus and interest rate cuts to support Bitcoin’s recovery after an initial selloff.
Under a moderate-growth scenario, institutional demand, ETFs, and corporate purchases could continue supporting BTC.
Matt Hougan , Chief Investment Officer at Bitwise , believes Bitcoin could rise over the long term regardless of how the artificial intelligence (AI) boom unfolds , even if investments in the technology ultimately trigger a financial crisis.
In a note to clients, Hougan examined different economic scenarios and their potential implications for BTC, ranging from a sharp increase in productivity to a recession caused by AI-related debt.
Hougan warned that Bitcoin could experience substantial declines during a crisis, although he believes government and central bank responses would ultimately support its recovery .
Bitcoin Could Recover After an AI Bubble Bursts
In the worst-case scenario, Hougan suggests that companies involved in data center development could default on their debt, causing losses for insurers exposed to AI-related bonds.
A crisis of that magnitude could trigger a recession comparable to the one in 2008. However, he estimates that the probability of a government bailout would be close to 100% , given the strategic importance of AI .
According to his analysis, Bitcoin could initially fall before staging a strong recovery as the money supply expands and interest rates potentially decline .
He also considers a scenario in which the Federal Reserve maintains an accommodative monetary policy and inflation rises, prompting more investors to turn to BTC as a store of value .
Economic Growth Could Also Benefit BTC
Hougan believes successful AI development could substantially increase productivity and reduce the cost of numerous services .
In that scenario, scarce assets such as gold and Bitcoin could appreciate even as other goods and services become cheaper.
He also examined an economy experiencing 3% growth and 4% interest rates , without a major financial crisis.
Under those conditions, demand for BTC could remain supported by ETF inflows, institutional adoption, and purchases by companies and governments .
Hougan acknowledged that his analysis faces certain risks, including advances in quantum computing , a coordinated regulatory crackdown, or fiscal austerity policies.
He also recalled that Bitcoin lost approximately 50% of its value in just a few days during the March 2020 crisis , meaning a favorable long-term outlook does not rule out periods of steep declines.
