Bitwise Estimates Bitcoin Fair Value at $224,000 as Sovereign Debt Hedge

A recent report from Bitwise's European arm has shed light on the theoretical fair value of bitcoin, suggesting it could reach $224,000 if widely adopted as a portfolio insurance against G20 sovereign debt defaults.

The estimate is based on a model proposed by analyst Greg Foss in 2021 that treats bitcoin as a credit default swap on sovereign bonds. This framework frames bitcoin as a non-correlated hedge against the possibility of major sovereign defaults, given its decentralized nature and lack of central issuer or sovereign backstop.

The report highlights potential headwinds for bitcoin, including higher global bond yields and the impact of monetary policy on its value. It notes that Japanese 30-year government bond yields have hit record highs, while 10-year JGB yields sit at multi-decade peaks. The International Monetary Fund and OECD have warned that governments and companies are set to borrow $29 trillion from bond markets this year, 17% higher than in 2024.