Bitwise Predicts Bitcoin Will Rise Long-Term Regardless of AI and Interest Rate Movements

Key Points of This Article

• Bitwise predicts Bitcoin will rise even after the collapse of the AI bubble
• Bitwise expects Bitcoin to rise regardless of interest rate hikes

Both AI and Interest Rates on the Rise

Matt Hogan, Chief Investment Officer of the U.S. cryptocurrency management firm Bitwise Asset Management, stated on the 14th that regardless of the trajectory of AI (artificial intelligence) or the direction of interest rates, Bitcoin (BTC) will rise in the long term, as noted in his weekly memo.

According to Hogan, at a recent conference, there were many questions about how Bitcoin would perform in scenarios such as a recession caused by the Federal Reserve's (FRB) interest rate hikes or the collapse of the AI bubble. He noted that the range of potential outcomes is the widest he has seen in his career, making it difficult to plan.

He likened this to the "Choose Your Own Adventure" book series, examining three possible paths for AI. In a world where AI boosts productivity and GDP, and where intelligence-driven sectors like software, legal, and pharmaceuticals become cheaper, value will shift to irreplaceable assets such as waterfront land, masterpieces, gold, and Bitcoin, leading to an increase in Bitcoin's value.

In a world where the AI bubble collapses, initially Bitcoin will drop along with risk assets, but since AI investment represents the largest infrastructure investment in U.S. history and is geopolitically significant, he believes the probability of public bailouts is nearly 100%. After experiencing interest rate cuts and balance sheet expansions, the money supply will surge, ultimately leading to a significant rise in Bitcoin's value.

He stated that Bitcoin will rise in a world with a growth rate of 3% and an interest rate of 4%, and referenced the example of Bitcoin rising nearly 20 times after dropping 50% in just a few days at the onset of the COVID-19 pandemic in early 2020, acknowledging that there could be tough phases along the way.

Market After September CPI

Regarding the Consumer Price Index (CPI) for September, the U.S. Bureau of Labor Statistics announced on the night of the 14th that it rose 3.7% year-on-year, exceeding market expectations of 3.6%, causing Bitcoin to drop about 2% and fall below $82,000.

The core CPI, excluding food and energy, also rose 2.6% year-on-year, surpassing the expected 2.5%. According to CME Group's FedWatch, the probability of an interest rate hike at the Federal Open Market Committee (FOMC) meeting on October 27-28 rose to about 54%.

Additionally, regarding Bitcoin's lower bounds, according to overseas media such as The Block, Paul Howard, Senior Director at the liquidity provider Wincent, predicted a range of $80,000 to $88,000 in the short term, suggesting that if it falls below $80,000, $75,000 could come into view.

On the other hand, Matt Mena, Senior Strategist for cryptocurrency research at cryptocurrency management firm 21Shares, analyzed that much of the decline was already priced in when Bitcoin fell below $85,000 and tested the support zone of $81,000 to $82,000 again, stating that if macro uncertainties are resolved, Bitcoin could rise above $85,000 and head towards $90,000.

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