Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Recommendation: BUY

12-Month Price Target: €120,000

Initiating coverage on Bitcoin EUR (BTC_EUR) with a Buy rating and a 12-month price target of €120,000. We believe Bitcoin is uniquely positioned as the preeminent digital store of value, benefiting from accelerating institutional adoption, an unparalleled scarcity mechanism, and a growing network effect that solidifies its role as “digital gold” in the evolving global financial landscape.

1. Key Data & Forecast Snapshot

• Current Price (BTC_EUR): €74129
• Market Cap: €1480040611859.72 (approx. €1.48 Trillion)
• 24h Volume: €40326088979.61 (approx. €40.33 Billion)
• 24h Change: -1.05%
• 12-Month Price Target: €120,000
• Implied Upside: 61.87% (calculated as (€120,000 – €74129) / €74129)
• Recommendation: BUY

2. Investment Thesis

Why now is the time to invest in Bitcoin:

• Accelerating Institutional Adoption: The launch of spot Bitcoin ETFs in major markets (e.g., US) has unlocked significant demand from institutional investors, wealth managers, and corporate treasuries. News reports highlight increasing institutional interest and infrastructure development (e.g., JPMorgan enabling crypto trading for institutional clients). This trend legitimizes Bitcoin as an investable asset class and provides regulated access, driving substantial capital inflows.
• Digital Gold Paradigm: Bitcoin continues to solidify its position as a superior store of value asset for the digital age. Its immutable, decentralized, and censorship-resistant nature offers a compelling alternative to traditional safe-haven assets like gold, particularly in an environment of increasing geopolitical uncertainty and potential fiat currency debasement.
• Post-Halving Scarcity Shock: The recent Bitcoin “halving” event (April 2024) reduced the new supply of Bitcoin entering the market by 50%. Historically, these supply shocks have been significant catalysts for price appreciation, as demand confronts a structurally reduced issuance rate, emphasizing Bitcoin’s unparalleled scarcity.
• Macroeconomic Hedging & Portfolio Diversification: In a world grappling with inflation concerns, quantitative easing, and sovereign debt issues, Bitcoin offers a non-correlated asset that can act as an effective hedge against traditional financial system risks. Its inclusion can enhance portfolio diversification and potentially improve risk-adjusted returns.
• Robust Network Effects: Bitcoin’s network continues to grow in terms of users, developers, infrastructure, and transaction volume. This expanding ecosystem enhances its security, utility, and ultimately, its intrinsic value through Metcalfe’s Law, where the value of a network is proportional to the square of the number of connected users.

3. Investment Positives

Rank-ordered drivers supporting our Buy recommendation:

1. Unprecedented Institutional Inflows & Adoption:
   • Spot Bitcoin ETFs have democratized access for traditional financial players.
   • Corporations are increasingly considering Bitcoin for treasury management.
   • Wealth management firms are adding Bitcoin to client portfolios.
   • Source: Live Market News, Blockworks, Ainvest, SSGA, Yahoo Finance.
2. Programmed Scarcity & Halving Cycle:
   • Fixed supply cap of 21 million Bitcoins, making it deflationary by design.
   • The quadrennial “halving” events drastically reduce new supply, historically preceding significant price rallies.
   • The recent April 2024 halving sets the stage for the next phase of appreciation.
3. Global Digital Store of Value:
   • Offers a permissionless, borderless, and censorship-resistant medium for wealth preservation.
   • Increasingly seen as a hedge against inflation and monetary debasement by central banks.
   • Superior portability and divisibility compared to traditional alternatives like gold.
4. Decentralized Security & Immutability:
   • Secured by the largest computational network globally, making it extremely resilient to attacks.
   • The open-source, decentralized nature ensures transparency and resistance to single points of failure.
5. Growing Network & Ecosystem:
   • Continuous development of Layer 2 solutions (e.g., Lightning Network) enhancing scalability and transaction speed.
   • Expanding global user base and increasing merchant adoption, albeit slowly.
   • Increasing regulatory clarity in key jurisdictions fostering broader acceptance.

4. Competitive/Peer Analysis

Bitcoin vs. Gold (Traditional Store of Value)

• Scarcity: Both are scarce. Gold’s supply increases unpredictably through mining; Bitcoin’s supply is programmatically fixed at 21 million.
• Portability & Divisibility: Bitcoin is digital, easily transferable globally, and divisible into 100 million satoshis. Gold is physical, difficult to transport in large quantities, and less divisible.
• Verifiability: Bitcoin’s authenticity is cryptographically guaranteed on a public ledger. Gold requires physical inspection and assays.
• Security: Bitcoin is secured by cryptography and a decentralized network. Gold relies on physical security and trusted third parties (vaults).
• Yield: Neither typically provides a native yield, though custodial solutions or lending protocols for both exist.
• Digital Native: Bitcoin is inherently digital, suitable for internet-native finance. Gold is not.
• Conclusion: Bitcoin presents a compelling “digital upgrade” to gold, offering superior attributes for the modern financial system while retaining core store-of-value characteristics.

Bitcoin vs. Ethereum (Digital Asset Ecosystem)

• Primary Utility: Bitcoin is primarily designed as a decentralized, scarce store of value and peer-to-peer electronic cash. Ethereum is a smart contract platform, enabling decentralized applications (dApps), DeFi, NFTs, and other innovations.
• Monetary Policy: Bitcoin has a predictable, fixed supply cap and deflationary issuance schedule. Ethereum’s supply mechanics are more dynamic (post-Merge, it can be deflationary or inflationary depending on network activity and staking rewards).
• Security Model: Both are highly secure. Bitcoin relies on Proof-of-Work (PoW) for its main chain (pre-halving, hashrate is paramount). Ethereum transitioned to Proof-of-Stake (PoS) for higher energy efficiency and different scalability approaches.
• Innovation Focus: Bitcoin’s core protocol is deliberately slow-changing, prioritizing security and stability. Ethereum undergoes more frequent and significant protocol upgrades to support its broader application ecosystem.
• Conclusion: While both are leading cryptocurrencies, they serve distinct purposes. Bitcoin is the foundational “reserve asset” of the crypto economy, while Ethereum is the primary platform for decentralized innovation. They are complementary rather than direct competitors for the same investment thesis.

5. Estimates & Operating Assumptions (3-Year Forward Looking)

Our projections for Bitcoin are based on the assumption of continued institutional integration, increasing global adoption, and the consistent execution of its pre-programmed scarcity model.

Estimates based on general knowledge 2024/2025. Circulating supply estimates are approximate and subject to minor variations.

Operating Assumptions:

• Regulatory Environment: We assume continued, albeit slow, global regulatory clarity and acceptance, particularly in major economic blocs.
• Macro-economic Climate: Persistent global inflation, increased national debt, and potential instability are assumed to drive continued demand for scarce, decentralized assets.
• Technological Development: Ongoing improvements in scaling solutions (e.g., Lightning Network) and user experience will enhance Bitcoin’s utility.
• Institutional Engagement: ETF inflows, corporate adoption, and integration by traditional financial institutions are expected to continue their upward trajectory.

6. Valuation

Valuing Bitcoin requires a different approach than traditional equity analysis, given its unique characteristics as a decentralized, non-revenue-generating asset. We employ a combination of scarcity models, network effect proxies, and relative valuation metrics.

Network Value to Transaction (NVT) Ratio

• Concept: The NVT ratio divides Bitcoin’s market capitalization (network value) by its daily on-chain transaction volume. It is often analogized to a Price-to-Earnings (P/E) ratio for traditional equities, with transaction volume acting as a proxy for “earnings” or utility.
• Interpretation: A high NVT ratio can suggest that Bitcoin’s market value is disproportionately high relative to the value being transferred on its network, potentially indicating overvaluation. Conversely, a low NVT ratio can suggest undervaluation.
• Current Trend: While NVT fluctuates, recent institutional interest and market volatility often influence transaction volumes. Sustained growth in fundamental usage and transaction throughput, coupled with price appreciation, indicates healthy demand absorbing new supply. We monitor NVT for signs of significant divergence.

Stock-to-Flow (S2F) Model

• Concept: The Stock-to-Flow model values scarce assets based on their existing supply (“stock”) relative to the rate at which new supply is produced (“flow”). For Bitcoin, flow is the newly minted coins from mining.
• Interpretation: Assets with higher S2F ratios (meaning a large existing stock relative to a small new flow) are considered scarcer and, by the model’s proponents, tend to have higher value. Bitcoin’s S2F ratio dramatically increases after each halving, implying significant price appreciation due to increased scarcity.
• Application: The S2F model has historically shown a strong correlation with Bitcoin’s price trajectory. While not without its critics, it provides a powerful framework for understanding the impact of Bitcoin’s programmed scarcity. The recent halving has pushed Bitcoin’s S2F ratio higher, suggesting a robust long-term price outlook according to this model.

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 of the system (n²). Applied to Bitcoin, the value of the network grows exponentially as more users adopt it.
• Interpretation: A growing base of unique active addresses, increasing transaction count, and expanding infrastructure (nodes, wallets, exchanges) all contribute to a stronger network effect, which fundamentally underpins Bitcoin’s long-term value.
• Conclusion: While difficult to quantify precisely, the qualitative evidence of Bitcoin’s expanding global reach and user base suggests strong underlying network effects are continuing to drive its value appreciation.

Valuation Conclusion: Our valuation methodology combines scarcity-driven models, on-chain utility metrics, and network effects. The confluence of these factors, especially in the wake of the halving and strong institutional demand, supports our positive outlook and €120,000 price target, suggesting substantial room for growth from current levels.

7. Key Risks

• Regulatory Uncertainty: Governments globally are still developing frameworks for cryptocurrencies. Adverse regulatory actions, outright bans, or excessively restrictive policies in major jurisdictions could negatively impact Bitcoin’s price and adoption.
• Technological Risks: While Bitcoin’s network is highly secure, potential future threats like quantum computing (long-term theoretical risk), unforeseen software bugs, or successful 51% attacks (highly improbable for Bitcoin due to its scale) could undermine trust.
• Competition from Other Cryptocurrencies & CBDCs: The emergence of other innovative cryptocurrencies or Central Bank Digital Currencies (CBDCs) could present competition, though Bitcoin’s first-mover advantage and status as “digital gold” offers a significant moat.
• Market Volatility: Bitcoin is known for extreme price swings, which can be driven by market sentiment, macroeconomic events, or large liquidations. This volatility presents significant risk for investors, especially in the short to medium term.
• Macroeconomic Headwinds: A severe global economic downturn, tight monetary policy, or a flight to traditional safe-haven assets could temporarily reduce investor appetite for risk assets, including Bitcoin.
• Environmental Concerns: The energy consumption of Bitcoin’s Proof-of-Work mining remains a public and regulatory concern. While the industry is increasingly moving towards renewable energy sources, negative perception or punitive environmental regulations could pose a risk.
• Security Breaches/Exchange Hacks: While Bitcoin’s protocol is secure, centralized exchanges, custodial services, or individual wallets are vulnerable to hacking and theft. Loss of funds due to such events can impact market sentiment.

8. Appendix

Definitions

• Bitcoin (BTC): A decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
• Halving: A pre-programmed event within the Bitcoin protocol that cuts the reward for mining new blocks by half, reducing the rate at which new Bitcoins are created and increasing its scarcity.
• Market Cap: The total value of all Bitcoins currently in circulation, calculated by multiplying the current price of one Bitcoin by the total number of Bitcoins in circulation.
• NVT Ratio (Network Value to Transaction Ratio): A valuation metric for cryptocurrencies, calculated by dividing the network’s market capitalization by its daily transaction volume.
• Stock-to-Flow (S2F) Model: A valuation model that quantifies the scarcity of an asset by dividing its existing supply (stock) by the annual production (flow).

Disclaimer

This report is for informational purposes only and does not constitute financial advice. The information contained herein is based on sources believed to be reliable but is not guaranteed as to accuracy or completeness. Investing in cryptocurrencies involves substantial risk, including the risk of complete loss. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.

This report was generated by an AI assistant based on the provided inputs and publicly available information as of the current date.

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.