Bitwise Analysts See Bitcoin’s Fair Value at $219K as Sovereign Hedge

According to analysts, rising global debt and mounting fiscal concerns have positioned Bitcoin (BTC) as a potential hedge against sovereign defaults. Bitwise researchers project Bitcoin’s fair value at $219,000 if it serves as “portfolio insurance” against sovereign bond risks.

The decentralized cryptocurrency’s unique features could appeal to investors seeking alternatives amidst economic instability.

Bitwise Researchers say Bitcoin Gains Traction Amid Sovereign Debt Risks

The worldwide ratio of government debt to GDP has hit record highs and raised new fears about potential nation-state bankruptcies. Experts point out that France and the UK face increased attention because their government finances are declining. U.S. national borrowing is close to its $36 trillion maximum point, which creates new uncertainty about how sustainable such debt levels are.

These changes increase bond market dangers because defaults can start chain reactions that destabilize the financial system. Due to their growing concerns about government bonds, more investors now look toward Bitcoin as an investment option. However, Bitcoin’s high price fluctuations limit its effectiveness as a dependable crisis protection tool.

People consider Bitcoin an attractive investment option when their currency might lose value rapidly because it operates without central control, and there are fixed limits to how many Bitcoins exist. Experts predict Bitcoin prices will rise if G20 nations with total bonds of $69.1 trillion face a 6.2% default chance. The situation proves that Bitcoin works as a security for investors despite its typical price movements.

Users are still worried about Bitcoin’s sudden price changes, even as more people buy it. The cryptocurrency market has seen Bitcoin’s value move up and down by 2.5% in seven days, which proves continued market instability. Bitcoin stands strong as a defense against economic troubles because no government can regulate it.

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Bitcoin Gains Appeal as Economic Uncertainty Grows

Each year, the UK government spends more than £100 billion on interest payments on its borrowed money. As interest expenses continue to rise, the nation faces market uncertainty about its ability to control fiscal duties. The dropping British pound and decreasing bond sales strengthen fears about the economy.

The U.S. government has dealt with fragile economic prospects since its national debt reached its borrowing limit. New credit score cuts reflect the dangers of heavy government spending and ongoing trade disagreements. Bond markets now face uncertainty after Fitch reduced the U.S. credit rating to AA+.

Although BTC operates outside traditional banks, its unpredictable price changes reduce its effectiveness as a safe investment. Small daily price changes hide real market dangers and make short-term predictions difficult. On Jan. 20, Bitcoin displayed a 10% trading range during the day but produced a final profit of less than 1%.

Bitcoin offers investors safety and scarcity features that appeal to those who distrust traditional paper money. Experts say Bitcoin serves as an effective hedge because it functions outside major financial systems. More people could become interested because the world faces increasing monetary problems.