Bitwise: Bitcoin could reach $224K amid sovereign debt stress

Bitwise warned that Bitcoin’s theoretical fair value could reach about $224,000 if rising sovereign debt and stress in global bond markets lead investors to use the cryptocurrency as a hedge against default risk. The firm described the figure as a theoretical estimate rather than a price target.

The report cites OECD projections showing governments and companies may need to borrow roughly $29 trillion in 2026, up 17% from 2024 and nearly double the amount raised a decade earlier. About 78% of OECD government borrowing is expected to refinance existing debt, increasing sensitivity to movements in interest rates and market liquidity.

Japan is highlighted as a key source of strain in fixed-income markets. The report notes Japan’s 10-year government bond yield has moved toward 2.78% and the 30-year yield hit record highs while public debt is near 230% of GDP. Japanese investors are estimated to hold about $1.2 trillion in U.S. Treasurys; higher domestic yields — roughly 2.66% on the 10-year Japanese bond versus 2.19% for yen-hedged 10-year U.S. Treasurys in the report’s account — could encourage capital to return home and reduce demand for overseas debt.

The firm also points to stress outside Japan. U.S. 30-year Treasury yields reached roughly 5.11% on May 11, a level not seen since 2007, and sovereign risk premiums measured by 10-year swap spreads have risen to levels last observed during the 2011-2012 European debt crisis. Bitwise says those moves can tighten financial conditions and push real yields higher.

The report argues that a more severe disturbance in bond markets could prompt central banks to inject liquidity to stabilize markets, and that such policy actions might support Bitcoin prices if investors view it more widely as a non-sovereign store of value.

Bitwise cites a valuation model developed by investor Greg Foss that places Bitcoin around $224,000 under broader adoption as a hedge against sovereign default risk. The firm describes the number as theoretical. Independent analysis referenced in the report uses a logarithmic model called the Bitcoin Decay Channel; that model produces a range between about $90,000 and $255,000 by the end of 2026 and shows recent price action near its long-term support zone.

The report defines real rates as the federal funds rate minus U.S. CPI inflation and notes Bitcoin has historically performed better when real rates fall. It contrasts Bitcoin’s 2021 rally, which coincided with declining real rates, with the 2022 sell-off that occurred as real rates rose during aggressive monetary tightening. Bitwise warns Bitcoin may remain range-bound in the near term while real yields stay high and financial conditions tighten.

The firm restates that the $224,000 figure is a theoretical valuation, not an explicit forecast, and cautions that investment outcomes will depend on future interest rates, monetary policy decisions and market liquidity.