Bitcoin: AI Crash or Superabundance, Bitwise Sees Only One Winner

Three paths, one destination. Matt Hougan, Chief Investment Officer at Bitwise, sent a note to his clients outlining three trajectories for the U.S. economy, depending on the fate of artificial intelligence. In all three scenarios, he sees Bitcoin finishing higher.

This exercise is not academic for investors. Indeed, the top four U.S. hyperscalers have committed nearly $400 billion for the 2025 fiscal year alone. Moreover, this amount is largely financed by private debt.

Key Points

• Matt Hougan outlines three macroeconomic trajectories related to artificial intelligence in a note to Bitwise clients.
• In the event of a credit collapse of data centers, he assigns a probability of "almost 100%" to a public bailout plan. Following that would be a surge in the money supply.
• In a world of machine-produced abundance, the scarcity of gold and the 21 million units of BTC would regain value.
• The executive also lists his own blind spots, including the quantum threat and a return of the West to budgetary austerity.

If the AI Bubble Bursts, Bitcoin Drops First and Then Rebounds

The first branch is the most violent. First, borrowers who built the data centers default. Then, insurers holding billions in AI-backed bonds come under pressure. These securities often reside in private credit vehicles, outside the prudential ratios imposed on banks. Finally, the economy tips into a recession comparable to that of 2008. However, Matt Hougan estimates the probability of a public bailout plan at "almost 100%". This is because AI has become a geopolitical issue that Washington will not allow to collapse.

"Because the deployment of AI is the largest infrastructure investment in America's history, the resulting bailout is the largest as well."
Matt Hougan, Chief Investment Officer at Bitwise
Bitwise manages Bitcoin and Ethereum ETFs. Its Chief Investment Officer Matt Hougan signs the note to clients.

After the initial shock, a wave of liquidity would follow, bringing a sharp rebound in prices. The precedent is known. Between March 2020 and the fall of 2021, the U.S. M2 money supply increased by over 25%. During the same period, Bitcoin rose from $3,800 to nearly $69,000. The same logic applies to interest rates. An aggressive Fed tightening that triggers a recession brings us back to the same point. Conversely, if the institution allows inflation to take hold, Matt Hougan expects a shift of investors towards Bitcoin as a store of value.

Superabundance, the Scenario Where Bitcoin's Scarcity Pays Off

The second branch is significantly more optimistic. The Chief Investment Officer of Bitwise uses the term superabundance. He describes a world where AI explodes productivity and GDP. Software, legal advice, design, pharmaceuticals, and medical diagnostics see their costs plummet. What remains are the assets that artificial intelligence cannot produce. Seaside real estate, great works of art, gold, and Bitcoin maintain their scarcity. Consequently, their value rises.

The gold market is already applying this reasoning, without waiting for the machine revolution. London concentrates the bulk of global physical trading. Moreover, the commercial instability of the Trump era has reinforced this position rather than eroding it. The vaults in the British market hold around 8,500 tons of metal. Additionally, central banks have been purchasing more than 1,000 tons per year since 2022.

The third branch is the most tedious. Growth is at 3%, rates at 4%, and the debt of data centers is being honored. The economy then reaches "something that approaches a soft landing." The already established sources of demand continue to operate quietly. For example, U.S. spot ETFs have absorbed over $60 billion in net flows since their launch. Similarly, corporate treasuries and a few sovereign states continue to add BTC to their balance sheets. "Bitcoin just gains by being there," summarizes Matt Hougan.

Bitwise and Its Counter-Trend Bet, Including Blind Spots

This convergence is intriguing. One might almost be tempted to read the note like a choose-your-own-adventure book. Except that the three branches lead to the same page. Bitwise indeed manages a spot Bitcoin ETF. This gives the conclusion a structural comfort that must be kept in mind. The firm has been assuming this position for months. Its Chief Investment Officer had already described crypto as a "counter-trend bet," while investors rushed towards AI-related stocks. Likewise, Juan Leon, senior strategist at Bitwise, stated to The Block that the price floor of Bitcoin continues to rise. And this, despite the AI boom and regulatory delays.

"For Bitcoin investors, what happens to AI doesn't matter in the long run. As I see it, every path eventually leads to a higher Bitcoin."
Matt Hougan, Chief Investment Officer of Bitwise

The straight line is not guaranteed, however. He says so himself. Bitcoin had lost about 50% of its value in a few days during the Covid panic of March 2020. More recently, the liquidation cascade of October 2025 wiped out nearly $19 billion in positions within twenty-four hours. Furthermore, three threats could undermine the thesis. First, the arrival of a quantum computer capable of breaking key cryptography. Second, a coordinated crackdown by states. Finally, a return of the West to budget austerity. "I think this is unlikely, but not impossible," he writes.

The three worlds described by Bitwise share a hypothesis that the note does not conceal. Each indeed assumes that states will respond to the shock with liquidity rather than austerity. Matt Hougan himself points this out as the weak point of his demonstration. It is also the only one of his risks that does not depend on any technological disruption.

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