Asset manager Bitwise has released a new report arguing that escalating sovereign debt burdens could reinforce Bitcoin’s narrative as a hedge against macroeconomic risk. The firm links the thesis to mounting stress in global bond markets, where governments and corporations face a significantly heavier borrowing calendar this year.
According to the report, the OECD projects that public and corporate borrowers will raise roughly $29 trillion in 2026—a 17% increase over 2024 levels and nearly double the amount raised a decade ago. Crucially, about 78% of OECD government borrowing is expected to go toward refinancing existing debt rather than funding new spending. Bitwise warns that this refinancing burden could elevate investor concerns over sovereign balance sheets if yields remain elevated.
In such an environment, Bitwise suggests Bitcoin may attract greater attention from investors seeking assets outside government credit systems. The firm cites investor Greg Foss’s sovereign default risk model, which theoretically values Bitcoin near $224,000 if it gains wider adoption as a hedge against government credit risk. Bitwise emphasizes the figure is not a formal price target but a reflection of potential fair value under the model.
Japan features prominently in the analysis due to its high public debt, now at nearly 230% of GDP. The country’s 10-year government bond yield recently climbed to 2.78%, with the 30-year yield hitting a record high. Japanese investors hold around $1.2 trillion in US Treasuries, but Bitwise notes that higher domestic yields—and a yen-hedged yield on 10-year US Treasuries of only 2.19% compared to Japan’s 2.66%—could encourage repatriation of capital back into Japanese bonds.
The report also highlights US Treasury market stress, with 30-year yields reaching 5.11% on May 11, the highest since 2007. Sovereign risk premiums, measured through 10-year swap spreads, have risen to levels not seen since the European debt crisis of 2011–2012.
While Bitwise acknowledges that tighter financial conditions may weigh on Bitcoin in the short term, it argues that a serious bond market disruption could force central banks to inject liquidity—a scenario that has historically benefited Bitcoin. Additionally, researcher Sminston’s Bitcoin Decay Channel model suggests a potential price range of $90,000 to $255,000 by the end of 2026.
