Bitwise Model Values Bitcoin at $224K as Debt Risks Rise

Bitwise Europe’s analysis places bitcoin’s illustrative fair value as a sovereign-default hedge at about $224,000. The model output depends on weighted sovereign default probabilities and the market capitalisation of the bonds being treated as insured. Bitcoin traded between roughly $72,000 and $83,000 in May.

Bitcoin rose above $80,000 at the start of May after a period of crowded short positions unwound. Perpetual funding rates had been negative on 21 of 30 days in April, and roughly $42 million in short futures liquidations occurred within 24 hours as those positions closed. Global bitcoin exchange-traded products recorded $166.5 million of net inflows in the first half of May, and net realized profit and loss flipped positive, sending the price briefly to about $83,000.

The second half of May saw net outflows of $1.031 billion from global bitcoin ETPs. Market sentiment cooled, the Crypto Fear and Greed Index returned to fear territory, and bitcoin was rejected near the 200-day moving average, around $82,000. The price retreated toward $72,000 by month-end. Bitwise Europe identifies the $78,000–$85,000 range as a central band where short-term holder cost basis, U.S. spot ETF aggregate cost basis and the firm’s True Market Mean converge, and notes that a decisive reclaim of $85,000 has historically aligned with a shift into a new bull cycle.

The report highlights growing stress in sovereign bond markets. Governments and companies plan to borrow about $29 trillion from bond markets in 2026, a 17% increase from 2024 and roughly double the volume from a decade ago. The IMF has warned that markets are becoming less forgiving of sovereign borrowing assumptions. Japanese 10-year yields reached multi-decade highs in May; Bitwise Europe flags Japan’s roughly $7.5 trillion sovereign bond market and its role as a major foreign holder of U.S. Treasuries.

Onchain activity was muted through May, with combined realized profit and loss throughput near yearly lows. Long-term holder supply reached an all-time high of about 14.85 million BTC, equal to roughly 74.3% of circulating supply. The report shows aging cohorts with 60.5% of bitcoin unmoved for over a year, 48.5% for over two years, 42.9% for over three years and 33.0% for over five years. Bitwise Europe notes long-term supply is growing at more than ten times the rate of monthly new issuance.

Institutional demand also influenced price action. The report records that Strategy’s STRC perpetual preferred equity traded below par and estimates Strategy provided about two-thirds of institutional bitcoin demand via treasury companies and ETPs so far in 2026. Bitwise Europe’s sentiment measures peaked mid-month, with the Cryptoasset Sentiment Index at its highest reading in 12 months before reversing as outflows and technical resistance appeared.

The report references a theoretical model proposed in 2021 by Greg Foss that frames bitcoin as a hedge against sovereign default. Applying current weighted default probabilities across G20 sovereign markets produces the illustrative fair value near $224,000. Bitwise Europe presents that figure as model-derived and not a price target. The report’s other valuation measures show bitcoin’s market-value-to-realized-value ratio in the lower half of its historical distribution, while the Nasdaq 100’s price-to-book ratio sits near record highs.

Kevin Warsh was sworn in as Federal Reserve chair on May 22. Bitwise Europe’s natural language analysis characterized his recent Senate testimony as slightly more hawkish than his predecessor’s.