Bitcoin (BTC, BUY) - AI Uncertainty Leaves Our Bitcoin Bull-Market View Intact

Bitcoin (BTC, BUY) - AI Uncertainty Leaves Our Bitcoin Bull-Market View Intact

We maintain BUY and our early bull-market assessment for Bitcoin. AI uncertainty is more likely to change the path of the cycle than to overturn our current judgment. Steady AI growth would allow BTC’s improving supply-and-demand structure to support further gains without requiring Fed easing. An AI slowdown would likely trigger initial selling, but could subsequently create a more favorable monetary backdrop for recovery. On-chain evidence continues to support the cycle turn. The preceding bear market crystallized losses and reduced urgent selling, while the recovery now combines renewed holder profitability with moderate profit-taking. At the October 28 snapshot, BTC was approximately $81.1K, above the short-term-holder cost basis of $75.8K, True Market Mean of $77.8K and Realized Price of $54.1K. This configuration resembles historical early recoveries and supports retaining the bull-market regime as our base case. Steady AI growth does not require Fed cuts for BTC to advance. BTC gained approximately 1,294% in 2017 and 154% in 2023 on the weekly observations used in this report, while the Fed raised rates. Resilient investment and employment would support risk appetite, even as high rates remained a headwind. The greater risk would be repeated upward revisions to the expected tightening endpoint or the duration of restrictive policy, particularly if real yields and the dollar rose together. An AI slowdown would likely hurt BTC initially, with stronger relative prospects as monetary conditions improve. Falling technology shares would encourage cash raising and deleveraging across liquid assets. If weaker capital spending and hiring lead to lower expected rates and real yields, BTC could recover while AI-related earnings remain under pressure. A broader credit shock would deepen the initial drawdown and could bring QE and fiscal support in addition to rate cuts. In 2020, BTC gained approximately 304%, versus 47.6% for QQQ, following the March liquidation and expansion of policy support. Moderately elevated oil prices would complicate monetary policy without overturning our cycle view. Between September 2007 and April 2008, the Fed cut its policy-rate target from 5.25% to 2.00% while monthly average WTI rose from approximately $80 to $113 per barrel. QE2 also continued in 2011 with WTI around $110. Higher oil alone would therefore not preclude support for weakening demand or financial stress. The more challenging outcome would be an energy shock that spreads into persistent underlying inflation and forces further monetary restraint.