As the world faces a pressing $30 trillion debt refinancing deadline in 2026, Bitwise sees potential for Bitcoin to carve out a distinct role amid financial market stresses. The investment firm points to rising yields on Japanese government bonds and a cautionary message from the IMF regarding declining demand for sovereign debt as factors tightening liquidity conditions globally.
Bitwise argues that Bitcoin’s unique position—outside of government balance sheets and lacking a central issuer—gives it resilience when traditional sovereign borrowing becomes more challenging. This dynamic could shift investor interest toward digital assets, particularly if central banks respond by injecting fresh liquidity into markets.
The firm also connects Bitcoin’s performance to movements in real interest rates, noting that the cryptocurrency tends to benefit when real yields drop. Persistent inflationary pressures combined with pauses in Federal Reserve rate hikes could create favorable conditions for Bitcoin to rally again after recent volatility.
Bitcoin experienced a volatile May, climbing above $80,000 before falling back toward $70,000 amid significant outflows from Bitcoin exchange-traded products (ETPs) and increasing market caution. Despite surging briefly past $83,000 earlier, the market stalled in the $80,000 to $85,000 range—a critical zone identified by Bitwise as a threshold that will influence trader confidence and market health going forward.
Bitwise attributed Bitcoin’s earlier price advance to several factors, including a short squeeze, positive on-chain metrics, and substantial net inflows totaling roughly $166 million into Bitcoin ETPs. Meanwhile, long-term holders added around 125,000 BTC in the preceding month, providing some support during the rally. However, the momentum shifted rapidly, as global Bitcoin ETPs recorded over $1 billion in outflows, which dampened sentiment when prices failed to sustain gains above the key resistance zone.
Long-term Bitcoin holders are tightening supply significantly. Bitwise notes that a record 14.85 million BTC—approximately 73% of the circulating supply—has remained dormant, with a substantial share unmoved for years: 60% untouched for over a year, nearly half for more than two years, and one-third inactive for at least five years. This pattern constricts available supply amid slower returns from new buyers, heightening scarcity.
In comparison to major U.S. technology stocks, Bitcoin still appears undervalued by some measures. Bitwise highlights that Bitcoin’s market value to realized value (MVRV) ratio remains below its long-term average, contrasting with U.S. tech indexes like the Nasdaq 100, which show elevated price-to-book ratios. This valuation gap underscores Bitcoin’s potential appeal as a diversifying asset amid macroeconomic uncertainty and escalating debt pressures.