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.
- The firm said the analysis is based on the Greg Foss model, which interprets BTC as an asset with characteristics similar to a credit-default swap (CDS) on sovereign debt.
- Bitwise added that $224,000 is an illustrative result calculated from the weighted average default probability of G20 countries and the size of the sovereign bond market, and does not imply a price target or forecast.
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Bitcoin’s theoretical fair value could reach $224,000 if it gains acceptance as a hedge against sovereign bond default risk, according to a new analysis. The view reflects a broader market argument 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 its 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.
"Bitcoin can be viewed as a hedge against the default risk of major countries because it has no central issuer or sovereign payment guarantee," Bitwise wrote.
The firm added that the $224,000 figure is an illustrative result derived from the weighted average default probability of G20 countries and the size of the sovereign bond market assumed to be insured. It does not represent a price target or forecast.
The idea of Bitcoin as an alternative store of value or a hedge against sovereign risk has recently gained traction amid a widening US fiscal deficit, increased Treasury issuance and rising government debt burdens.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
