Bitcoin has drawn a new valuation argument from Bitwise, as rising sovereign debt pressures keep bond markets under strain and strengthen the case for BTC as a macro hedge.

Bitwise said in a new report that deeper investor concern over government debt could widen Bitcoin’s perceived undervaluation. The asset manager linked the argument to stress in global bond markets, where governments and companies face a much heavier borrowing calendar in 2026.

Bitwise links Bitcoin case to debt pressure

According to Bitwise, the OECD expects public and corporate borrowers to raise about $29 trillion in 2026. The estimate is 17% higher than 2024 levels and nearly twice the amount raised a decade earlier.

The report added that about 78% of OECD governments’ borrowing will go toward refinancing existing debt rather than funding new spending. Bitwise said this refinancing burden may raise investor concerns about sovereign balance sheets if yields remain elevated.

In that setting, Bitwise said Bitcoin could attract more attention from investors looking for assets outside government credit systems. The firm did not present the view as a direct price forecast, but it said the macro setup could improve Bitcoin’s hedge narrative.

Japan remains a key bond market test

Japan received special attention in the Bitwise report because of its high debt load and rising bond yields. Bitwise noted that Japan’s public debt stands at nearly 230% of GDP, placing it among the highest debt burdens of major economies.

The firm said Japan’s 10-year government bond yield recently climbed to 2.78%, while its 30-year yield reached a record high. By Tuesday, Bitwise noted that the 10-year Japanese yield stood at 2.66%.

At the same time, Japanese investors hold around $1.2 trillion in US Treasurys, according to the report. Bitwise said higher yields at home now make foreign bonds less attractive after currency hedging costs.

The firm compared Japan’s 10-year yield of 2.66% with the 2.19% yield available on yen-hedged 10-year US Treasurys. Bitwise said this gap could encourage Japanese capital to return to domestic bonds.

US yields add to sovereign risk concerns

The report said the pressure is not limited to Japan. Bitwise noted that US 30-year Treasury yields reached 5.11% on May 11, the highest level since 2007.

Bitwise also cited sovereign risk premiums measured through 10-year swap spreads. The firm said those premiums have risen to their highest levels since the European debt crisis of 2011 and 2012.

While Bitwise said tighter financial conditions may weigh on Bitcoin in the short run, it also said a serious disruption in the bond market could force central banks to provide liquidity. Under that scenario, the firm said Bitcoin could benefit if investors expect fiat liquidity to rise again.

Bitcoin fair value model reaches $224,000

Bitwise cited investor Greg Foss’s sovereign default risk model, which values Bitcoin near $224,000 if it gains wider use as a hedge against government credit risk. The firm stressed that this figure is theoretical and not a formal price target.

The report also said Bitcoin’s path will depend partly on real interest rates, which Bitwise calculated as the Fed Funds rate minus US CPI inflation. Bitwise said Bitcoin performed well during the 2021 bull market as real rates fell, while the 2022 bear market coincided with rising real rates amid aggressive Federal Reserve tightening.

Meanwhile, Bitcoin researcher Sminston said BTC could trade between $90,000 and $255,000 by the end of 2026. Sminston based the estimate on the Bitcoin Decay Channel, a logarithmic model that tracks past cycle tops and bottoms.