Bitwise Says Bitcoin Fair Value Could Reach $224,000 as Sovereign Default Hedge
Summary
- Bitwise Europe said Bitcoin (BTC) could have a theoretical fair value of $224,000 if it becomes established as a hedge against sovereign bond default risk.
- Bitwise said BTC can be viewed as a hedge asset against the default risk of major countries because it has no central issuer or sovereign payment guarantee.
- Bitwise added that $224,000 is an illustrative result derived from the G20 countries’ weighted average probability of default and the size of the sovereign bond market, and does not represent a price target or forecast.
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Bitcoin’s theoretical fair value could reach $224,000 if it becomes established as a hedge against sovereign bond default risk, Bitwise said. The thesis reflects a growing market view that Bitcoin’s role could expand beyond digital gold to include protection against sovereign credit risk.
Bitwise Europe put Bitcoin’s theoretical fair value at about $224,000 in a monthly research report, CoinDesk reported on June 3.
The analysis is based on a model proposed by investor Greg Foss. It treats Bitcoin as an asset with characteristics similar to a credit default swap, or CDS, on sovereign debt.
Bitwise said Bitcoin can be viewed as a hedge against the default risk of major countries because it has no central issuer and no sovereign payment guarantee.
The $224,000 figure is an illustrative result based on the weighted average default probability of G20 countries and the assumed size of the sovereign bond market being insured, the firm added. It does not represent a price target or forecast.
The view that Bitcoin can serve as an alternative store of value or a hedge against sovereign risk has gained traction amid a widening U.S. fiscal deficit, increased Treasury issuance and rising concern over government debt burdens.
