A report from Bitwise's European division estimates that the theoretical fair value of Bitcoin might be around $224,000 per coin, emphasizing that this is merely an illustrative assessment rather than a specific price target.
This valuation is based on a theoretical framework introduced by Greg Foss in 2021, which positions Bitcoin as a credit default swap for G20 sovereign bonds.
By Shaurya Malwa | Edited by Stephen Alpher Updated Jun 3, 2026, 2:48 p.m. Published Jun 3, 2026, 1:26 p.m. 2 min readMake preferred on
Key Points:
- Bitwise's report highlights that the theoretical fair value of Bitcoin is approximately $224,000, based on its use as a hedge against sovereign debt defaults.
- The analysis indicates that increasing stress on sovereign bonds, as evidenced by record Japanese yields and rising global borrowing costs, may enhance Bitcoin's attractiveness as a decentralized safeguard against government debt risks.
- However, the report also identifies some immediate challenges for Bitcoin, including reduced demand related to the Strategy's STRC funding vehicle and Bitcoin's lower valuation compared to U.S. large-cap technology stocks, with Bitcoin recently priced around $66,300.
This monthly research report from Bitwise's European arm, released this week, sets Bitcoin's theoretical "fair value" at about $224,000, assuming it gains traction as a form of portfolio insurance against defaults on G20 sovereign debts.
Despite this, the research team clarified that this figure is a "model-implied illustrative figure, not a price target or forecast."
Originating from a theoretical model proposed by analyst Greg Foss in 2021, this valuation treats Bitcoin as akin to a credit default swap on sovereign bonds.
Given that Bitcoin operates without a central authority and lacks a sovereign backing, Foss's model presents it as a hedge that is not correlated with the risk of significant sovereign defaults.
The estimated $224,000 fair value is derived from the weighted default probabilities associated with the G20 sovereigns and the market capitalization of the bonds that Bitcoin would theoretically insure.
The report underscores the current pressures within the sovereign bond markets, noting that Japanese 30-year government bond yields have reached unprecedented levels, while 10-year JGB yields are at multi-decade highs.
Furthermore, the International Monetary Fund (IMF) and the OECD have projected that governments and corporations will borrow $29 trillion from bond markets this year, a 17% increase compared to 2024, with the IMF suggesting that the market is becoming less accommodating and that investors are increasingly skeptical about the limits of sovereign borrowing capabilities.
Bitwise specifically pointed out the vulnerabilities in Japan's JGB market, highlighting its size of approximately $7.5 trillion, which is the second-largest sovereign bond market globally, alongside Japanese investors holding around $1.2 trillion in U.S. Treasury securities and Japan's debt-to-GDP ratio of about 230%.
The report also noted that 10-year swap spreads, which indicate sovereign risk premiums, are at their highest levels since the European debt crisis of 2011-2012 for major sovereign bonds.
However, it also flagged several short-term challenges for Bitcoin.
Increased global bond yields have made the dividends from Strategy's (MSTR) STRC perpetual preferred equity less appealing to investors, and STRC has recently traded below its par value.
According to Bitwise, purchases by Strategy have constituted roughly two-thirds of institutional demand for Bitcoin via global treasury firms and Bitcoin exchange-traded products (ETPs) in 2026, indicating that a slowdown in Strategy's STRC-funded buying could significantly impact Bitcoin's demand.
Bitwise's optimistic scenarios are dependent on monetary policy shifts and ongoing sovereign stress.
A potential pause by the Federal Reserve, under the newly appointed chair Kevin Warsh, in response to rising inflation could lead to lower real yields, which historically has been beneficial for Bitcoin. Additionally, a collapse in the sovereign bond market that necessitates central bank intervention to maintain financial stability could reinforce Bitcoin's position as a decentralized hedge against sovereign counterparty risk.
The report also highlights a notable disparity between Bitcoin's valuation and that of U.S. large-cap tech stocks. Bitcoin's market-value-to-realized-value ratio is currently in the lower half of its historical distribution, with only 36% of historical readings falling below this level.
In contrast, the NASDAQ 100's price-to-book ratio is at its highest recorded level, with 99% of historical readings below the current figure.
As of Wednesday, Bitcoin was trading around $66,300, having declined from over $71,000 earlier in the week.