Asset manager Bitwise reports that Bitcoin's current valuation may not reflect its potential as a hedge against deepening sovereign debt fears. The firm highlights mounting pressure in global bond markets, with the OECD estimating governments and companies will need to borrow roughly $29 trillion in 2026, a 17% increase from 2024.
Japan remains a key focus: its 10-year government bond yield recently climbed to 2.78%, while public debt is near 230% of GDP. Japanese investors hold about $1.2 trillion in US Treasuries, but higher domestic yields are making overseas bonds less attractive.
US 30-year Treasury yields hit 5.11% on May 11, the highest since 2007, and sovereign risk premiums are at levels unseen since the European debt crisis of 2011-2012.
Bitwise believes a deeper bond-market disruption could become bullish for Bitcoin if central banks are forced to inject liquidity. The firm cites a model by investor Greg Foss, valuing Bitcoin at roughly $224,000 if it gains broader adoption as a hedge against sovereign default risk. The firm stresses this is a theoretical estimate, not a price target.
Near-term, Bitwise notes that Bitcoin may remain range-bound as higher real yields and tighter financial conditions weigh on demand. However, if inflation rises while the Fed holds rates steady, real rates could fall, creating a more supportive backdrop.
