Bitwise Chief Investment Officer Matt Hougan has outlined three economic scenarios that he argues all ultimately support Bitcoin’s long-term appreciation, even as the cryptocurrency faces near-term pressure from inflation and Federal Reserve uncertainty.
In a Wednesday investment memo, Hougan said Bitcoin could benefit from an artificial intelligence productivity boom, an AI-driven economic crash, or a period of moderate growth. If AI drives superabundance by making software, legal work, design, pharmaceuticals and diagnostics cheaper, scarce assets such as waterfront land, great art, gold and bitcoin would still rise in value, he explained.
If the AI boom turns into a bust, Hougan argued that data-center borrowers would default, insurers holding AI-linked bonds would face stress, and the economy could enter a recession resembling 2008. He put the odds of a government bailout in that scenario at “nearly 100%” given AI’s geopolitical importance, predicting Bitcoin would sell off initially and then “rally hard” as money supply surges.
The third scenario is an economy that “muddles along” with around 3% growth and 4% interest rates, achieving something close to a soft landing. In that outcome, Hougan said Bitcoin’s existing demand sources—including spot ETF inflows, advisor adoption, and corporate and sovereign balance sheet allocations—would remain intact. “Bitcoin wins by showing up,” he wrote.
Hougan also tied the outlook to Federal Reserve policy. Aggressive rate hikes could weaken the economy and prompt stimulus, while persistent inflation without further hikes could push investors toward Bitcoin as a store of value. A successful soft landing could support institutional investment.
The memo arrived as Bitcoin fell below $81,500 after US inflation data showed September annual inflation at 3.7%, above forecasts of 3.6%, and monthly core inflation up 0.3%. Traders raised the estimated probability of an October 28 rate increase to 41.5% from about 22%.
Despite this, Hougan maintained that long-term Bitcoin prospects depend on broader economic developments rather than individual policy decisions. “As I see it, every path ultimately ends with bitcoin higher,” he concluded, while warning that risks include quantum computing threats, coordinated government restrictions, and Western fiscal austerity.
