Initiation of Coverage: Bitcoin (BTC_EUR)

Key Data & Forecast Snapshot

Recommendation: BUY

Price Target (12M): €94,143.75

Upside: ~25.0%

• Current Price (BTC_EUR): €75,315
• Market Cap: €1,503,878,183,636.60
• 24h Volume: €31,824,766,657.02
• 24h Change: +1.40%

12-Month Forecasts (Analyst Estimates)

• Price Target (BTC_EUR): €94,143.75

  Calculation: Current Price * (1 + Expected Growth) = €75,315 * 1.25 = €94,143.75

• Market Cap: €1,879,847,729,545.75

  Calculation: Current Market Cap * (1 + Expected Growth) = €1,503,878,183,636.60 * 1.25 = €1,879,847,729,545.75

Investment Thesis

Bitcoin (BTC) represents a compelling long-term investment opportunity as a decentralized, scarce digital asset with increasing institutional acceptance and a robust network effect. We initiate coverage with a BUY rating and a 12-month price target of €94,143.75, reflecting an approximate 25.0% upside from current levels. Our conviction is driven by:

• Structural Demand Shift: Significant capital flow into Bitcoin, driven by increasing institutional adoption. Major financial institutions, including J.P. Morgan, are expanding crypto trading services for institutional clients, signaling a profound shift in market perception and accessibility.
• Proven Scarcity & Deflationary Mechanics: Bitcoin’s hard-capped supply of 21 million coins and programmed halving events create predictable scarcity, contrasting with inflationary fiat currencies. This design positions it as a robust store of value.
• Macroeconomic Hedging Potential: Bitcoin increasingly serves as a hedge against inflation and currency debasement, offering a non-sovereign alternative during periods of economic uncertainty and geopolitical instability.
• Network Effect & Security: The Bitcoin network continues to grow in users, transaction volume, and hash rate, reinforcing its security and utility as a global settlement layer.

Investment Positives

1. Accelerating Institutional Adoption & Regulatory Clarity

• Spot Bitcoin ETFs in key markets have significantly enhanced accessibility for traditional investors, acting as a major conduit for institutional capital.
• Growing interest from major financial players, as evidenced by news of J.P. Morgan expanding crypto trading for institutional clients, validates Bitcoin as a legitimate asset class.
• Analyst view suggests a structural shift in capital allocation, with institutions increasingly recognizing Bitcoin’s role in diversified portfolios (Source: ainvest.com, ssga.com).

2. Inherent Scarcity and Halving Dynamics

• The fixed supply of 21 million Bitcoins ensures long-term scarcity, making it inherently deflationary compared to fiat currencies.
• Periodic “halving” events, which reduce the rate of new Bitcoin issuance, historically precede significant price appreciation due to supply shock. The next halving is projected around 2028.

3. “Digital Gold” Narrative & Macro Hedge

• Bitcoin’s characteristics—decentralization, censorship resistance, and verifiable scarcity—position it as a modern-day store of value, analogous to gold.
• Growing acceptance as a hedge against inflation and geopolitical risks, offering an alternative investment vehicle outside traditional financial systems.

4. Robust Network Growth and Security

• The Bitcoin network continues to expand in terms of active addresses, transaction volume, and computational power (hash rate), signifying increasing utility and security.
• Layer 2 solutions (e.g., Lightning Network) are enhancing scalability and transaction speed, broadening Bitcoin’s utility beyond just a store of value.

Competitive/Peer Analysis

Bitcoin vs. Gold

• Similarities: Both serve as stores of value, hedges against inflation, and have limited supply.
• Bitcoin Advantages:
  • Portability: Easily transferable across borders with minimal cost and time.
  • Divisibility: Highly divisible into smaller units (satoshi).
  • Verifiable Scarcity: Fixed supply enforced by code, transparently auditable.
  • Decentralization: Not subject to seizure or censorship by any single entity.
• Gold Advantages:
  • History: Thousands of years of acceptance as a store of value.
  • Lower Volatility: Generally more stable price movements compared to Bitcoin.
  • Tangibility: Physical asset, often preferred by traditional investors.
• Outlook: Bitcoin is emerging as a credible digital alternative to gold, particularly appealing to younger demographics and digitally native investors. Institutional embrace suggests a continued convergence of market acceptance.

Bitcoin vs. Ethereum (ETH)

• Bitcoin (BTC): Primarily designed as a decentralized store of value and a peer-to-peer electronic cash system. Its value proposition centers on scarcity, security, and immutability.
• Ethereum (ETH): A smart contract platform enabling decentralized applications (dApps), NFTs, and decentralized finance (DeFi). Its value is derived from its utility as a programmable blockchain ecosystem.
• Key Differentiators:
  • Purpose: BTC = Digital Gold/Store of Value; ETH = Programmable Blockchain/Web3 Infrastructure.
  • Tokenomics: BTC has a fixed supply (21M); ETH has an uncapped supply with deflationary mechanisms post-merge (EIP-1559 burn).
  • Consensus: BTC = Proof-of-Work (PoW); ETH = Proof-of-Stake (PoS) since “The Merge”.
• Outlook: While both are leading cryptocurrencies, they serve distinct purposes. Bitcoin’s strength lies in its simplicity and singular focus on monetary integrity, making it less susceptible to competition on its core value proposition than Ethereum, which faces ongoing competition from other smart contract platforms.

Estimates & Operating Assumptions

Given Bitcoin’s nature as a decentralized asset, traditional operating assumptions do not apply. Instead, we focus on key network metrics and price trajectory influenced by supply mechanics and demand drivers.

Key Assumptions (Analyst Estimates)

• Supply Growth: Highly predictable, decreasing over time due to halving events. Currently ~19.7 million BTC in circulation, growing towards 21 million.
• Network Adoption: Continued increase in unique active addresses and wallet count, driven by institutional onboarding and emerging market adoption.
• Transaction Volume: Steady growth in on-chain transaction volume (both value and count), reflecting increased utility and settlement use cases.
• Hash Rate & Security: Continued increase in hash rate, indicating a more secure and robust network.

3-Year Forward Looking Estimates (Analyst Estimates)

Note: Price targets for FY2026E and FY2027E are illustrative, based on assumed growth rates of 20% and 15% respectively on the prior year’s estimate. Specific market conditions, regulatory changes, and technological developments may significantly alter these projections.

Valuation

Traditional valuation methodologies like Discounted Cash Flow (DCF) are not applicable to Bitcoin due to its non-revenue-generating nature. We rely on crypto-native valuation models and network effects.

1. Network Value to Transaction (NVT) Ratio

• Concept: Analogous to a P/E ratio for stocks, NVT compares Bitcoin’s market capitalization (Network Value) to its daily on-chain transaction volume.
• Interpretation:
  • A high NVT ratio suggests the network’s valuation is growing faster than its utility (transactions), potentially indicating overvaluation.
  • A low NVT ratio suggests the opposite, potentially indicating undervaluation.
• Current View: While precise real-time NVT data is not available, current institutional inflows and market sentiment suggest the NVT ratio is likely balancing at fair value. However, the anticipated continued growth in network utility and institutional adoption could support a higher NVT multiple over our forecast horizon, indicating potential for appreciation.

2. Stock-to-Flow (S2F) Model

• Concept: The S2F model values Bitcoin based on its scarcity, comparing the existing supply (stock) to the annual new supply (flow). Assets with high S2F ratios (meaning high scarcity) are theorized to hold value better.
• Interpretation: Bitcoin’s S2F ratio is among the highest for any asset, approaching that of gold, and is further amplified by halving events. The model historically points to significant long-term price appreciation driven by this engineered scarcity.
• Outlook: The S2F model underpins the “digital gold” narrative and suggests that Bitcoin’s long-term price trajectory will continue to be upward, albeit with volatility.

3. Network Effects (Metcalfe’s Law)

• Concept: Metcalfe’s Law states that the value of a telecommunications network is proportional to the square of the number of connected users. While not a precise formula for Bitcoin, it conceptually explains the exponential growth in value as more users join the network.
• Application: Growth in active addresses, unique wallets, and on-chain transaction volume contribute to Bitcoin’s network effect. As more individuals and institutions adopt Bitcoin, its utility and perceived value increase disproportionately.
• Outlook: Continued growth in global user adoption and integration into mainstream finance will reinforce Bitcoin’s network effect, supporting our positive price outlook.

Key Risks

• Regulatory Uncertainty: Evolving global regulatory frameworks could impact Bitcoin’s adoption, exchange operations, and market liquidity. Adverse regulations or outright bans in major economies pose a significant risk.
• Market Volatility: Bitcoin is known for extreme price volatility, driven by speculative trading, macroeconomic factors, and news events. This exposes investors to significant downside risk.
• Technological Risks: While the Bitcoin protocol has proven robust, potential (though low probability) risks include protocol bugs, quantum computing advancements threatening cryptography, or security breaches affecting exchanges and custody solutions.
• Competition & Innovation: While Bitcoin’s niche as a digital store of value is strong, competition from other cryptocurrencies, stablecoins, or central bank digital currencies (CBDCs) could impact its market dominance or use cases.
• Macroeconomic Headwinds: A severe global economic downturn, tight monetary policy, or widespread liquidity crunch could reduce investor appetite for speculative assets like Bitcoin, leading to price declines.
• Environmental, Social, and Governance (ESG) Concerns: The energy consumption of Bitcoin’s Proof-of-Work mining continues to attract ESG scrutiny. Regulatory or investor pressure regarding environmental impact could pose a risk to sentiment and adoption.
• “Black Swan” Events: Unforeseen events such as a major flaw discovery, a coordinated global attack on decentralized networks, or a catastrophic geopolitical event could severely impact Bitcoin’s value and trust.

Appendix

Definitions:

• Halving: A programmed event in Bitcoin’s protocol that halves the reward miners receive for validating transactions, thereby reducing the rate at which new Bitcoins are created. Occurs approximately every four years.
• Hash Rate: A measure of the total computational power being used to mine and process transactions on a Proof-of-Work blockchain like Bitcoin. A higher hash rate indicates a more secure network.
• NVT Ratio (Network Value to Transaction Ratio): A valuation metric comparing Bitcoin’s market capitalization (network value) to its daily on-chain transaction volume. Used to gauge if the network’s valuation is justified by its utility.
• Stock-to-Flow (S2F) Model: A valuation model that quantifies scarcity by dividing the current circulating supply (stock) by the annual new supply (flow). Applied to Bitcoin, it suggests a positive correlation between scarcity and price.

Compliance: This report is generated by an Artificial Intelligence model based on publicly available data and pre-programmed analytical frameworks. It is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. The information contained herein is subject to change without notice.

This report may contain AI-assisted analysis or be generated entirely by AI, which processes market data from publicly available sources for which altii accepts no responsibility for its accuracy. We strongly advise against using this report as a basis for investment decisions.