Bitwise CIO: All Macro Paths Lead to Bitcoin in the Long Term

Author: Matt Hougan, Chief Investment Officer at Bitwise

Compiled by Deep潮 TechFlow

Shenchao Summary: Will AI bring about superabundance or a bubble burst? Will the Fed raise or cut interest rates? Bitwise’s Chief Investment Officer breaks down all macro scenarios using a “choose your own adventure” framework—and concludes that for long-term Bitcoin investors, these big questions may not need answers at all.

The economy has many different paths, all leading to Bitcoin.

As a child, my favorite books were the “Choose Your Own Adventure” series. In these books, you might be walking down a path through a dark forest when suddenly you encounter a dragon. The book asks you: Do you a) attack the dragon (turn to page 5); b) try to befriend the dragon (turn to page 21); or c) run away (turn to page 63)? What I loved most was seeing the outcome of each path—choose this, and everything turns out great; choose that, and everyone dies. But sometimes, the author would trick you: they’d give you a choice that didn’t matter at all. Whether you went left or right, you ended up in the same place—either a dungeon or a treasure chamber.

Recently, at various conferences, I’ve received many questions beginning with “What if… Bitcoin…”:

What if the Federal Reserve raises interest rates and drags us into a recession?

What if the Federal Reserve keeps interest rates unchanged while inflation surges?

What if the AI bubble bursts and we enter a recession?

What if AI brings about superabundance and infinite wealth?

The range of possible outcomes is paralyzing—it’s the widest I’ve ever seen in my career. Turn on CNBC, and within an hour you’ll hear one expert say AI will double GDP every year, while another claims it will lead to human extinction. How do you plan for this? The answer is what I did as a child: walk down every path and see where it leads. Let’s consider several possible paths for AI and how Bitcoin might respond.

In this world, productivity explodes and GDP surges. Anything primarily reliant on intellect—such as software, legal work, design, pharmaceuticals, or diagnostics—becomes extremely cheap. Every day feels like listening to Louis Armstrong’s “What a Wonderful World.”

Abundance versus scarcity is a tailwind, because value shifts toward things that cannot be replicated: coastal land, great works of art, gold, and of course, Bitcoin. So in this “adventure,” Bitcoin wins.

In this reality, as the global economy slips into recession, high-growth assets are being sold off. Data center borrowers are defaulting, and insurers holding billions in AI-related bonds are facing challenges. This is a replay of 2008.

Initially, Bitcoin will decline alongside other risk assets. But we all know what happens next: interest rate cuts, balance sheet expansion, and bailouts. Since AI infrastructure represents the largest investment in U.S. history, the accompanying bailouts will also be the largest. And given AI’s geopolitical significance, I believe the probability of a bailout is nearly 100%.

And what I believe will happen next is: a surge in money supply and a significant rebound in Bitcoin. This is precisely the environment in which Bitcoin was created.

Nothing dramatic happened. AI brought some economic growth, but not disruptive change. AI-related debt was repaid, and we approached a soft landing. In this world, Bitcoin continued doing what it has always done: more ETF inflows, greater adoption by financial advisors, and increased allocation by corporations and sovereign balance sheets. Government debt continued to accumulate, and demand for store-of-value assets kept rising. Bitcoin won by showing up.

The value of this mental exercise lies in the fact that, for Bitcoin investors, the outcomes of AI are not significant in the long term. In my view, all paths ultimately lead to Bitcoin rising.

Frankly, the same applies to interest rates. If the Fed aggressively raises rates and pushes us into a recession, the government will likely step in, and Bitcoin will likely rebound. If they don’t raise rates and inflation remains high, watch how investors turn to Bitcoin as a store of value. If the Fed achieves a soft landing, turn back to page 41—I see us moving steadily upward.

In nearly every scenario I can imagine, one of the following three things will occur: 1) Money and credit are created faster than real economic growth, benefiting assets with fixed supply; 2) The economy becomes so efficient that scarce goods command a premium; or 3) Nothing significant happens, and Bitcoin continues to gain market share.

The paths may differ, but the page you turn to is the same. That’s the trick in those old books: the choice doesn’t matter.

I’m not saying Bitcoin will rise in a straight line. In many of these scenarios, Bitcoin faces a difficult period before the story unfolds. At the start of 2020, during the COVID-19 panic, Bitcoin dropped 50% over a few days, then rebounded and rose approximately 20-fold.

Of course, the core Bitcoin narrative could also break down for reasons unrelated to macroeconomics. Quantum computing could threaten old wallets, governments around the world might coordinate a global crackdown, or Western governments might embrace austerity and restore sound monetary management of their currencies. I consider these unlikely, but not impossible.

But for long-term investors, the impact of macro-level concerns is smaller than most people realize, because nearly every possible economic path still leads to Bitcoin.

Risk and Important Information

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