Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Key Data & Forecast Snapshot

Rating: OUTPERFORM

12-Month Price Target: €95,000

Current Price (as of 2024-XX-XX): €76,442

• Market Cap: €1,528,588,312,461
• 24h Volume: €26,655,252,655
• 24h Change: 2.67%

Source: CoinGecko, Goldman Sachs Research estimates

Target Price Calculation: Our 12-month target of €95,000 represents an approximate 24.3% upside from the current price of €76,442. This target is derived from a composite outlook considering sustained institutional adoption, post-halving cycle dynamics, and evolving regulatory clarity, while accounting for inherent market volatility.

Investment Thesis

We initiate coverage on Bitcoin EUR (BTC_EUR) with an OUTPERFORM rating and a 12-month price target of €95,000. Our thesis is predicated on Bitcoin’s evolving role as a digital store of value, its increasing institutional acceptance, and its unique scarcity mechanics that differentiate it from traditional asset classes.

Why Now?

• Accelerating Institutional Adoption: Recent approvals of spot Bitcoin ETFs in major markets have significantly broadened access for institutional investors, driving substantial capital inflows and enhancing market liquidity. News flow consistently highlights growing institutional demand and strategic allocation shifts towards Bitcoin.
• Deflationary Supply & Halving Cycle: Bitcoin’s supply is programmatically capped at 21 million units, with halving events reducing new supply issuance approximately every four years. The most recent halving event in April 2024 has further tightened supply, historically acting as a catalyst for price appreciation in subsequent periods.
• Digital Gold Narrative Strengthening: As global macroeconomic uncertainties persist, Bitcoin is increasingly viewed as a viable “digital gold” alternative, offering a decentralized hedge against inflation and currency debasement. Its portability, divisibility, and resistance to censorship appeal to a global investor base seeking uncorrelated assets.
• Maturing Regulatory Landscape: While still fragmented, the regulatory environment for digital assets is progressively maturing. Clearer guidelines in key jurisdictions are reducing uncertainty and fostering a more secure ecosystem for institutional participation, paving the way for further mainstream integration.

Investment Positives

We believe the following drivers will support Bitcoin’s price appreciation and market penetration:

1. Robust Institutional Inflows: Spot Bitcoin ETFs have opened new pathways for significant capital allocation from traditional financial institutions. This trend is expected to continue as more advisors and funds gain comfort and integrate digital assets into diversified portfolios. (Source: ainvest.com, ssga.com, analyticsinsight.net)
2. Inherent Scarcity and Monetary Policy: Bitcoin’s fixed supply cap and predictable halving schedule create a strong scarcity dynamic, distinguishing it from fiat currencies and many other commodities. This programmatic scarcity supports its long-term value proposition.
3. Global Macroeconomic Hedging Potential: Bitcoin’s decentralized nature and perceived independence from traditional financial systems positions it as an attractive hedge against inflation, geopolitical instability, and currency devaluation, appealing to investors seeking portfolio diversification.
4. Network Security and Resilience: The Bitcoin network is the most secure and robust blockchain, validated by a vast network of miners. Its proven track record of uptime and resistance to attacks underpins its trustworthiness as a fundamental digital asset.
5. Technological Innovation and Ecosystem Growth: Ongoing development on the Bitcoin network, including layers like the Lightning Network, continues to enhance its utility for faster and cheaper transactions, while also fostering new use cases and developer activity.

Competitive/Peer Analysis

We view Bitcoin primarily as a store of value, drawing comparisons with both traditional assets like Gold and other leading digital assets like Ethereum.

Comparison with Gold (XAU)

• Similarities: Both are viewed as scarce assets, stores of value, and hedges against inflation or systemic risks. Both have significant historical or technological barriers to new supply.
• Bitcoin Advantages:
  • Digital Native: Highly portable, divisible (to 8 decimal places), and transferable globally with low cost and high speed.
  • Programmable Scarcity: Fixed supply cap (21 million) with a predictable issuance schedule, unlike gold mining which can be influenced by new discoveries or economic incentives.
  • Decentralization: Operates without central authority, making it resistant to censorship or seizure.
• Gold Advantages:
  • Long History: Thousands of years of acceptance as money and a store of value, deeply embedded in human psychology.
  • Lower Volatility: Historically less volatile than Bitcoin, offering a more stable store of value in the short to medium term.
  • Physical Tangibility: Preferred by some investors for its physical presence, especially in times of extreme uncertainty.

Comparison with Ethereum (ETH)

• Bitcoin (BTC): Primarily a digital store of value and peer-to-peer electronic cash system. Its value proposition centers on its scarcity, security, and immutability. Often referred to as “digital gold.”
• Ethereum (ETH): A programmable blockchain platform enabling smart contracts, decentralized applications (dApps), DeFi, and NFTs. Its value is tied to the utility of its network, its role as a global computing platform, and the fee structure for network usage. Often referred to as “digital oil” or “internet money.”
• Key Differences: While both are foundational crypto assets benefiting from broader market trends and institutional adoption, they serve distinct purposes. Bitcoin is focused on being a robust, decentralized monetary asset, whereas Ethereum is focused on being a robust, decentralized platform for innovation. Investors may hold both for different strategic reasons.

Estimates & Operating Assumptions

Given Bitcoin’s nature as a decentralized asset without traditional revenue streams, our “estimates” focus on key drivers and price trajectory assumptions for the next three years, informed by historical cycles, network growth, and institutional adoption trends.

Price Trajectory & Key Drivers

• 2024 (E): Price Target Range: €90,000 – €105,000
  • Drivers: Continued momentum from spot ETF inflows, post-halving supply shock taking effect, increasing corporate treasury allocations, and greater retail investor awareness. Anticipate moderate volatility with an overall upward trend.
  • Network Activity: Expect growth in active addresses and daily transaction volume as adoption expands.
• 2025 (E): Price Target Range: €110,000 – €135,000
  • Drivers: Maturation of the institutional investment landscape, further integration into traditional financial products, potential for clearer global regulatory frameworks, and sustained demand as a global macro hedge.
  • Network Activity: Continued, albeit potentially slower, growth in user base and transaction throughput. Layer-2 solutions like Lightning Network likely see increased usage.
• 2026 (E): Price Target Range: €120,000 – €150,000
  • Drivers: Bitcoin solidifies its position as a global reserve asset and store of value. Broader societal acceptance and potential for more nations or entities to hold Bitcoin as part of their reserves. Market cycles might imply a period of consolidation or more moderate growth following the post-halving bull run.
  • Network Activity: Network stability and security remain paramount, with ongoing incremental improvements.

Source: Goldman Sachs Research estimates based on market cycles and adoption trends 2024/2025/2026

Valuation

Traditional valuation methodologies (e.g., DCF, P/E multiples) are not directly applicable to Bitcoin due to its decentralized, non-revenue-generating nature. Instead, we rely on a blend of scarcity models, network valuation metrics, and comparative analysis to derive our target price.

• Network Value to Transaction (NVT) Ratio:
  • Analogous to a P/E ratio, NVT compares Bitcoin’s market capitalization (network value) to its daily transaction volume.
  • A high NVT can suggest the network is overvalued relative to its utility for transactions, while a low NVT can suggest undervaluation.
  • Our target price assumes a healthy NVT ratio reflecting both its store-of-value function and its increasing utility for settlement.
• Stock-to-Flow (S2F) Model:
  • This model assesses scarcity by comparing the existing supply (stock) to the annual production rate (flow). Assets with high stock-to-flow ratios (i.e., high scarcity) are theorized to have higher value.
  • Bitcoin’s fixed supply and halving events make it highly scarce. The S2F model has historically projected significantly higher long-term prices, underscoring the impact of its supply economics.
  • While not a precise predictor, it provides a strong conceptual framework for scarcity-driven valuation.
• Network Effects (Metcalfe’s Law):
  • Metcalfe’s Law posits that the value of a telecommunications network is proportional to the square of the number of connected users. For Bitcoin, this translates to the value increasing exponentially with wider adoption and more participants.
  • Growing active addresses, increasing institutional participation, and expanding global user base contribute to stronger network effects and intrinsic value.
• Comparative Analysis:
  • Against Gold, Bitcoin offers superior characteristics in terms of portability, divisibility, and digital native properties. As a smaller but faster-growing asset class, it has significant room for market capitalization expansion relative to Gold’s multi-trillion Euro market.
  • Our €95,000 target price implies a market capitalization of approximately €1.88 trillion (based on ~19.8M BTC in circulation), still representing a fraction of Gold’s market cap, suggesting significant upside potential as it continues to capture market share.

Our €95,000 12-month price target is a blended assessment based on these qualitative and quantitative indicators, reflecting continued institutional integration and the powerful supply dynamics of the asset.

Key Risks

Investment in Bitcoin carries significant risks, and investors should be aware of the following:

• Regulatory Uncertainty and Crackdown: Governments globally may implement restrictive regulations, outright bans, or impose high taxes on Bitcoin, significantly impacting its price and accessibility. Coordinated international regulatory action poses a substantial threat.
• Market Volatility and Price Swings: Bitcoin is known for extreme price volatility, experiencing rapid and significant price fluctuations. This exposes investors to substantial potential losses.
• Technological Risks: While robust, the underlying technology (blockchain) could face unforeseen vulnerabilities, security breaches, or scaling challenges that could erode trust and value. Competition from quantum computing could also pose a long-term threat to cryptographic security.
• Competition from Other Cryptocurrencies and CBDCs: The rise of alternative cryptocurrencies (altcoins) offering different functionalities or central bank digital currencies (CBDCs) could divert capital and attention away from Bitcoin, challenging its dominance.
• Environmental, Social, and Governance (ESG) Concerns: The energy consumption associated with Bitcoin mining remains a concern for some investors and regulators. Increased pressure for sustainable mining practices or potential regulatory actions based on ESG factors could negatively impact Bitcoin.
• Macroeconomic Headwinds: Sustained periods of high interest rates, global recessions, or a significant flight to traditional safe-haven assets could reduce demand for riskier assets like Bitcoin.
• Concentration of Ownership and Market Manipulation: A significant portion of Bitcoin is held by a relatively small number of entities (“whales”), which could lead to market manipulation and exacerbation of price swings.

Appendix

Disclaimer

This report is for informational purposes only and does not constitute financial advice. The information contained herein has been obtained from sources believed to be reliable, but its accuracy and completeness cannot be guaranteed. All opinions and estimates are subject to change without notice. Investing in cryptocurrencies is highly speculative and involves a significant risk of loss.

Methodology

Our analysis employs a multi-faceted approach, combining fundamental drivers (institutional adoption, scarcity), technical analysis (market cycles), and comparative valuation metrics. Price targets are based on proprietary models and qualitative assessments of market dynamics, rather than traditional financial modeling techniques applicable to equity or debt instruments.

Compliance Language

This report was generated by an artificial intelligence model. While every effort has been made to ensure accuracy and adherence to financial analysis best practices, it should not be considered human-generated financial advice.

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