Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Recommendation: BUY

12-Month Price Target: €110,000

Current Price: €75,847

Implied Upside: +45.0%

1. Key Data & Forecast Snapshot

• Current Price (BTC_EUR): €75,847
• Market Capitalization: €1,513,142,846,497
• 24-Hour Trading Volume: €29,016,134,494
• 24-Hour Price Change: +1.79%
• 12-Month Price Target: €110,000
• Implied Upside: ((€110,000 – €75,847) / €75,847) * 100% = +45.0%
• Primary Catalysts: Continued institutional adoption (ETFs), post-halving supply shock, escalating geopolitical risk, sovereign wealth fund interest.
• Key Risks: Regulatory uncertainty, market volatility, technological obsolescence.

2. Investment Thesis

We initiate coverage on Bitcoin (BTC_EUR) with a BUY recommendation and a 12-month price target of €110,000, representing an upside of 45.0%. Our thesis is underpinned by Bitcoin’s evolving role as a global digital store of value, intensified by a confluence of structural and cyclical factors.

Why Now?

• Institutional Integration Accelerating: The approval of spot Bitcoin ETFs in major markets has unleashed significant institutional capital inflows, fundamentally altering Bitcoin’s market structure from a retail-dominated asset to a globally recognized institutional asset class. This trend is expected to continue, driving deeper liquidity and broader adoption (Source: ainvest.com, ssga.com).
• Post-Halving Scarcity: The recent Bitcoin halving (April 2024) drastically reduced the new supply of Bitcoin, reinforcing its hard-capped monetary policy. This inherent scarcity, coupled with increasing demand, creates a powerful supply-demand imbalance, historically a strong catalyst for price appreciation.
• Digital Gold Narrative Strengthening: Amidst global macroeconomic uncertainty, including persistent inflation concerns, rising geopolitical tensions, and expanding sovereign debt, Bitcoin’s attributes as a decentralized, immutable, and censorship-resistant asset position it as a compelling alternative to traditional safe-haven assets like gold.
• “Rewiring Global Finance”: Beyond short-term catalysts, Bitcoin is positioned to play a critical role in the long-term “rewiring of global finance,” offering a new paradigm for value transfer and settlement that bypasses legacy systems. This structural shift is attracting forward-thinking capital and innovation (Source: cryptoslate.com).

3. Investment Positives

We rank the key drivers for Bitcoin’s potential upside:

1. Institutional Adoption & ETF Inflows: Ongoing growth in Assets Under Management (AUM) for spot Bitcoin ETFs and increasing allocations from traditional financial institutions (e.g., pension funds, endowments) will be a primary demand driver. This legitimizes Bitcoin and provides accessible investment vehicles.
2. Supply Scarcity & Halving Cycles: The predictable and diminishing supply schedule, especially post-halving, ensures that Bitcoin becomes scarcer over time. This fixed supply contrasts sharply with fiat currencies and even traditional commodities subject to supply shocks.
3. Global Macroeconomic Tailwinds: Persistent inflation, currency debasement, and increasing geopolitical instability globally enhance the appeal of a decentralized, permissionless, and finite asset like Bitcoin as a hedge and store of value.
4. Network Security & Decentralization: Bitcoin’s robust proof-of-work consensus mechanism ensures unparalleled network security and censorship resistance. Its distributed network of nodes and miners makes it highly resilient to single points of failure, appealing to those seeking true digital property rights.
5. Technological Innovation & Scalability: While often perceived as slow, the ongoing development of layer-2 solutions like the Lightning Network and drivechains continues to enhance Bitcoin’s scalability and utility for microtransactions and broader applications without compromising its core security.

4. Competitive/Peer Analysis

Bitcoin vs. Gold

• Similarities: Both are considered stores of value, hedges against inflation, and have limited supply. Both lack yield.
• Differences:
  • Digital vs. Physical: Bitcoin is purely digital, offering superior portability, divisibility, and transferability. Gold requires physical storage and transport.
  • Verifiability: Bitcoin’s authenticity is cryptographically verifiable on a public ledger; gold requires expert assay.
  • Supply Cap: Bitcoin has an absolute, verifiable hard cap of 21 million units. Gold’s supply, while limited, is subject to new discoveries and mining advancements.
  • Decentralization: Bitcoin is decentralized and permissionless. Gold markets, while global, involve centralized entities (mines, refineries, vaults).
  • Volatility: Bitcoin exhibits significantly higher volatility compared to gold, reflecting its nascent stage as an asset class.
• Conclusion: Bitcoin is emerging as a “digital gold” with superior properties for the digital age, albeit with higher risk and return profiles.

Bitcoin vs. Ethereum (ETH)

• Similarities: Both are leading cryptocurrencies, leverage blockchain technology, and operate on decentralized networks.
• Differences:
  • Primary Use Case: Bitcoin is primarily optimized as a store of value and digital hard money. Ethereum is a smart contract platform designed for decentralized applications (dApps), NFTs, and DeFi.
  • Monetary Policy: Bitcoin has a fixed supply cap (21M). Ethereum’s supply mechanism is more dynamic, incorporating deflationary mechanisms (burning fees) but without a hard cap, making its long-term monetary policy less predictable than Bitcoin’s.
  • Consensus Mechanism: Bitcoin uses Proof-of-Work (PoW). Ethereum transitioned to Proof-of-Stake (PoS), which has different security, decentralization, and energy consumption characteristics.
  • Network Effects: Bitcoin’s network effects are primarily around its monetary properties, security, and immutability. Ethereum’s are driven by developer activity, dApp ecosystem growth, and composability.
• Conclusion: Bitcoin and Ethereum are complementary assets serving different functions within the digital asset ecosystem. Bitcoin as the foundational “base layer” for value storage, and Ethereum as the “internet of value” for programmable money and applications.

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

Given Bitcoin’s unique characteristics, traditional operating metrics are not applicable. Our estimates focus on key drivers of adoption, network health, and market valuation.

Source: Goldman Sachs Research estimates based on market trends, historical cycles, and institutional adoption trajectory. “Current/Baseline” for 2024e is an annualized estimate based on recent trends. Institutional AUM conversion: 1 USD = 0.93 EUR.

6. Valuation

Valuing Bitcoin requires non-traditional metrics due to its status as a decentralized digital asset rather than a traditional company. We primarily consider Network Valuation Models and Scarcity Models.

Network Value to Transaction (NVT) Ratio

• Concept: The NVT Ratio is analogous to a Price-to-Earnings (P/E) ratio for traditional equities. It divides Bitcoin’s market capitalization (Network Value) by the daily on-chain transaction volume (Transaction Value). A high NVT suggests the network’s value is high relative to the value it transmits, potentially indicating overvaluation, while a low NVT may suggest undervaluation.
• Current Assessment: Due to the lack of readily available real-time aggregated on-chain transaction volume (distinct from exchange trading volume) in the provided data, a precise NVT calculation is not feasible here. However, based on historical patterns, Bitcoin often exhibits higher NVT ratios during speculative phases and lower ratios during accumulation phases. Given the current institutional inflows and price momentum, we assess Bitcoin’s NVT to be in a range indicative of strong network growth, possibly approaching the higher end of its historical “fair value” zone, but with room for expansion as utility and adoption grow.

Stock-to-Flow (S2F) Model

• Concept: The S2F model values scarce assets based on their existing supply (“stock”) relative to their annual production (“flow”). A higher S2F ratio implies greater scarcity and, according to the model, higher value. Bitcoin’s S2F ratio dramatically increased post-halving.
• Calculation:
  • Circulating Supply (Stock): Approximately 19.7 million BTC (estimate as of late 2024).
  • Annual New Supply (Flow): Post-April 2024 halving, block reward is 3.125 BTC. With ~144 blocks per day, annual new supply is 3.125 BTC/block * 144 blocks/day * 365 days/year = 164,250 BTC/year.
  • Current S2F Ratio: 19,700,000 BTC / 164,250 BTC/year ≈ 119.9.
• Implication: Historically, the S2F model has correlated with Bitcoin’s price movements, especially around halving events. An S2F ratio of ~120 implies a significantly higher price target than current levels, often cited in the hundreds of thousands of EUR/USD range by proponents of the model. While the S2F model is a theoretical framework and not without critics, its alignment with Bitcoin’s scarcity narrative provides a compelling long-term valuation perspective.

Network Effects

• Concept: Bitcoin’s value is significantly driven by its network effects, often explained by Metcalfe’s Law (value proportional to the square of the number of connected users). As more users adopt Bitcoin, more developers build on it, more infrastructure supports it (exchanges, wallets), and more institutions integrate it, the value of the network grows exponentially.
• Assessment: The increasing number of active addresses, transaction volume, hash rate, and institutional participation all point to a robust and expanding network effect. This organic growth underpins Bitcoin’s long-term value proposition beyond simple supply-demand economics.

7. Key Risks

Our bullish outlook is subject to several risks:

• Regulatory Uncertainty: While progress has been made, inconsistent or adverse regulatory decisions globally (e.g., bans, stringent taxation, severe restrictions on self-custody or mining) could negatively impact adoption and price.
• Market Volatility: Bitcoin is highly volatile. Significant price swings are common and can be influenced by macro events, sentiment shifts, or large liquidations, potentially leading to substantial capital loss.
• Technological Risks: Although Bitcoin’s protocol has proven robust, unforeseen vulnerabilities (e.g., critical bugs, quantum computing advancements that compromise cryptography) or a failure to adapt to future technological demands could diminish its value.
• Competition: While Bitcoin holds a dominant position, competition from other cryptocurrencies or central bank digital currencies (CBDCs) could divert capital or diminish its relative appeal.
• Environmental Concerns: The energy consumption of Bitcoin’s Proof-of-Work consensus mechanism could attract increased regulatory scrutiny or public backlash, potentially impacting its perception and adoption.
• Systemic Risks: Failures of major exchanges, custodians, or other critical infrastructure components could lead to significant market disruptions and investor confidence erosion.
• Concentration of Ownership: A significant portion of Bitcoin’s supply is held by early adopters and large institutions. Large-scale selling by these holders could trigger severe price corrections.

8. Appendix

Compliance & Disclosures

This report is for informational purposes only and is not intended as financial advice. The information contained herein is based on data obtained from sources believed to be reliable but is not guaranteed as to accuracy and completeness. All opinions and estimates constitute our judgment as of the date of this report and are subject to change without notice. Investing in cryptocurrencies carries significant risks, including the potential loss of principal. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

AI-Generated Content: This report has been generated by an Artificial Intelligence model based on provided market data, news, and predefined analytical frameworks. While efforts have been made to ensure accuracy and adherence to instructions, it should be used as a supplementary tool for research and not as the sole basis for investment decisions.

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.