Bitwise puts Bitcoin fair value at $224,000 as sovereign debt fears mount

Bitcoin's theoretical fair value stands at $224,000 if sovereign debt pressures push investors toward assets outside government credit systems, Bitwise said in a report published June 2.

"The scale of global refinancing needs creates a structural risk that could expand Bitcoin's role as a hedge against sovereign credit risk," Greg Foss, whose default risk model Bitwise cited, said in the report.

The OECD expects governments and companies to borrow about $29 trillion in 2026, a 17% increase from 2024 levels and nearly double the amount raised a decade earlier. About 78% of that borrowing will go toward refinancing existing debt rather than new spending, Bitwise noted. Japan's 10-year government bond yield recently climbed to 2.66%, while US 30-year Treasury yields reached 5.11% on May 11, the highest since 2007.

If bond market stress deepens and central banks respond with additional liquidity, Bitcoin could benefit as investors anticipate a return of fiat liquidity, Bitwise said. The firm described the $78,000 to $80,000 range as the key bull-bear battleground, with a break above $85,000 opening a path toward $95,000.

$29 Trillion Refinancing Wall Looms

Japan received special attention in the report because of its high debt load and rising bond yields. Japan's public debt stands at nearly 230% of GDP, placing it among the highest of major economies. Japanese investors hold about $1.2 trillion in US Treasurys, and higher domestic yields now make foreign bonds less attractive after currency hedging costs, Bitwise said. The firm compared Japan's 10-year yield of 2.66% with the 2.19% yield available on yen-hedged 10-year US Treasurys, a gap that could encourage Japanese capital to return to domestic bonds.

The pressure is not limited to Japan. US sovereign risk premiums, measured through 10-year swap spreads, have risen to their highest levels since the European debt crisis of 2011 and 2012, Bitwise said. While tighter financial conditions may weigh on Bitcoin in the short run, a serious disruption in the bond market could force central banks to provide liquidity, creating a favorable environment for Bitcoin.

Long-Term Holders Tighten Supply

Bitcoin's supply dynamics support the bullish thesis even as demand has weakened. Long-term holders now control a record 14.85 million BTC, equal to about 74.3% of the circulating supply, Bitwise said. More than 60% of Bitcoin supply has not moved in over one year, while 48.5% has remained untouched for more than two years.

Bitcoin's market-value-to-realized-value ratio remains below its long-term average, with only 36% of historical readings lower, according to Bitwise. The firm said this valuation gap could make Bitcoin more attractive if investors begin shifting capital from expensive technology stocks into scarce assets.

Bitcoin traded near $72,000 as of June 2, after failing to break through the $80,000 to $85,000 resistance zone in May. Global Bitcoin ETPs recorded more than $1 billion in net outflows during the month, weighing on sentiment. Bitwise said regaining the $78,000 to $85,000 range could improve investor confidence and bring fresh capital back into the market.

This article is for informational purposes only and does not constitute investment advice.