Bitwise Model Shows Bitcoin Is Deeply Underpriced at $224K Fair Value Amid Debt Crisis

Bitcoin Hit $83K Then Crashed to $72K — Here Is What Flipped

The month opened with bitcoin crossing $80,000 for the first time since late January. The initial move was largely mechanical. According to Bitwise Europe researchers André Dragosch and Luke Deans, perpetual funding rates had been negative on 21 of 30 days in April, signaling crowded short positioning. When those positions unwound, roughly $42 million in short futures liquidations cleared within 24 hours.

Global Bitcoin ETPs recorded net inflows of $166.5 million in the first half of the month. Net realized profit and loss flipped positive for the first time since late January. The sell-side risk ratio fell to its lowest reading since October 2023, and long-term holders added approximately 125,000 BTC over the period, per the Bitwise Europe report.

Sentiment peaked mid-month. The firm’s Cryptoasset Sentiment Index reached its highest reading in 12 months, with 13 of 15 sub-indicators above their short-term trend. Bitcoin also briefly touched $83,000 on reports of possible progress toward a U.S.-Iran de-escalation agreement.

The second half reversed the trend entirely. Global Bitcoin ETPs recorded net outflows of $1.031 billion. The Crypto Fear and Greed Index re-entered fear territory. Bitcoin was rejected at the 200-day moving average near $82,000 and retraced toward $72,000 to close the month.

A $29 Trillion Debt Wall and a New Fed Chair: What It Means for Bitcoin

Bitwise Europe’s report identifies a divided macro environment. On one side, global equities continued making new all-time highs, supported by strong corporate earnings and positive growth revisions. On the other hand, sovereign bond markets are under rising stress.

Governments and companies are set to borrow $29 trillion from bond markets in 2026, 17% more than in 2024 and double the amount from a decade ago, per the report. The IMF has warned that markets are becoming less forgiving of sovereign borrowing assumptions. Japanese 10-year bond yields reached multi-decade highs during the month, a development Bitwise Europe flags as particularly significant given Japan’s roughly $7.5 trillion sovereign bond market and its status as the largest foreign holder of U.S. Treasuries.

The report from Dragosch and Deans notes that Strategy’s STRC perpetual preferred equity has been trading below par, a headwind for further bitcoin purchases. Bitwise Europe estimates Strategy accounted for approximately two-thirds of institutional bitcoin demand through treasury companies and ETPs in 2026 so far.

Kevin Warsh was sworn in as Federal Reserve chair on May 22, succeeding Jerome Powell for a four-year term. Bitwise Europe’s natural language analysis of Warsh’s recent Senate Banking Committee speech characterizes his tone as slightly more hawkish than Powell’s. The firm notes that if the Fed holds rates steady while inflation rises, declining real yields could recreate a historically favorable macro backdrop for bitcoin.

14.9 Million Bitcoin Locked Away While Traders Step Back

Despite the price recovery attempt, onchain activity across spot, derivatives, options, and exchange-traded fund (ETF) venues sat near yearly lows throughout May, according to Bitwise Europe. The firm notes that only 3.3% of trading days on record have seen lower combined realized profit and loss throughput, indicating broad investor disengagement.

The supply side tells a different story. Long-term holder supply reached an all-time high of approximately 14.85 million BTC, or about 74.3% of circulating supply, per the report. That supply is growing at 10.3 times the rate of monthly new issuance. Across aging cohorts, 60.5% of all bitcoin has not moved in over one year, 48.5% in over two years, 42.9% in over three years, and 33.0% in over five years, with all four cohorts trending higher.

Bitwise Europe identifies the $78,000 to $85,000 range as the market’s current midpoint of control, where the True Market Mean, the short-term holder cost basis, and the U.S. spot Bitcoin ETF aggregate cost basis all converge. The 200-day moving average sits at $80,500 within that band. A decisive reclaim of the $85,000 zone, the report argues, would historically signal a transition into a new bull market cycle.

Bitcoin at a Historic Discount While Nasdaq Trades Near All-Time Highs

Bitcoin’s market-value-to-realized-value ratio currently sits below 64% of its historical observations, per Bitwise Europe, placing it in the lower half of its long-term distribution. The Nasdaq 100’s price-to-book ratio, by contrast, sits near its highest level on record, with approximately 99% of historical readings below the current level.

The report also references a theoretical model first proposed by Greg Foss in 2021, which estimates bitcoin’s illustrative fair value as a sovereign default hedge at approximately $224,000 today, based on weighted default probabilities across G20 sovereign bond markets. Bitwise Europe presents this as a model-implied figure, not a price target.