Initiation of Coverage: Bitcoin (BTC_EUR)

Recommendation: Overweight

Price Target (12 Months): €94,185

Current Price (as of 2024-XX-XX): €75,348

Potential Upside: 25.0%

We initiate coverage of Bitcoin (BTC_EUR) with an Overweight rating and a 12-month price target of €94,185. Our constructive outlook is driven by the asset’s increasing institutional adoption, post-halving supply shock dynamics, and its continued emergence as a decentralized store of value in a volatile macroeconomic environment. While 2025 saw some optimistic forecasts unmet, recent institutional inflows and continued structural tailwinds point to a robust long-term trajectory, with catalysts expected to build momentum towards 2026.

1. Key Data & Forecast Snapshot

Live Market Data (Source: CoinGecko)

• Current Price: €75,348
• Market Cap: €1,504,128,214,784.37
• 24h Volume: €33,201,496,403.60
• 24h Change: +1.68%

12-Month Forecasts

• Price Target (12 Months): €94,185
• Potential Upside: 25.0%
• Recommendation: Overweight

Key Assumptions for 12-Month Target

• Continued institutional demand following recent spot ETF approvals.
• Positive impact from the April 2024 Bitcoin Halving, reducing new supply.
• Stable to improving macroeconomic conditions, supporting risk assets.
• Growing recognition of Bitcoin as a “digital gold” asset class.

2. Investment Thesis: Why Now?

Bitcoin stands at a critical juncture, transitioning from a niche digital asset to a recognized component of global financial portfolios. The current environment presents a compelling “why now” for investors, underpinned by several converging catalysts:

Institutional Adoption & ETF Inflows

• **Catalyst for Growth:** Recent spot Bitcoin ETF approvals in major markets have unlocked significant institutional capital, providing a regulated and accessible investment vehicle. This represents a paradigm shift, allowing broader participation from traditional finance players (Source: ainvest.com, ssga.com).
• **Structural Demand:** The integration into regulated financial products provides a clear path for asset managers, wealth advisors, and even sovereign funds to allocate capital to Bitcoin, driving persistent demand that was previously constrained.
• **2026 Outlook:** Leading institutions like Cantor Fitzgerald and others anticipate increased institutional adoption to continue and potentially accelerate into 2026 (Source: pymnts.com, ainvest.com, youtube.com). This suggests a sustained, multi-year demand runway.

Post-Halving Scarcity

• **Supply Shock:** The quadrennial Bitcoin Halving event, which occurred in April 2024, significantly reduced the rate of new Bitcoin issuance. Historically, halvings have preceded periods of significant price appreciation due to a supply-side shock against sustained or increasing demand.
• **Deflationary Asset:** This programmed scarcity reinforces Bitcoin’s deflationary characteristics, contrasting sharply with traditional fiat currencies susceptible to quantitative easing and inflation.

Digital Gold Narrative & Macro Tailwinds

• **Inflation Hedge:** In an era of persistent inflation concerns and geopolitical instability, Bitcoin is increasingly perceived as a “digital gold” — a store of value uncorrelated with traditional financial markets and sovereign risk.
• **Portfolio Diversifier:** Its unique properties offer diversification benefits within a broader investment portfolio, attracting investors seeking alternatives to conventional hedges.

Network Security & Resilience

• **Robust Infrastructure:** Bitcoin’s decentralized Proof-of-Work network has demonstrated unparalleled security and resilience over its 15-year history, processing trillions in value without central points of failure.
• **Global Accessibility:** Its permissionless nature provides access to financial services for billions globally, underpinning its long-term utility beyond just a store of value.

While 2025 saw some bullish price targets fall short (Source: wsj.com), this short-term recalibration does not detract from the fundamental, long-term drivers now firmly in place for Bitcoin. The ongoing institutional embrace and inherent supply dynamics position Bitcoin for continued growth and increased market penetration.

3. Investment Positives (Rank-Ordered Drivers)

1. **Accelerating Institutional Adoption & ETF Inflows:** The approval of spot Bitcoin ETFs has opened the floodgates for institutional capital, providing regulated access to a broad base of traditional investors. This structural demand is a fundamental shift, expected to drive sustained inflows and price appreciation into 2026 and beyond. (Source: ainvest.com, ssga.com, pymnts.com)
2. **Post-Halving Supply Shock:** The April 2024 Halving event cut the new supply of Bitcoin by 50%, exacerbating its inherent scarcity. Historically, halvings have been strong catalysts for price growth as demand outstrips reduced supply, particularly when coupled with increasing institutional interest.
3. **”Digital Gold” Narrative & Macro Hedge:** Bitcoin’s established role as a decentralized, censorship-resistant store of value positions it as a compelling hedge against inflation and geopolitical instability. Its finite supply directly contrasts with the inflationary nature of fiat currencies, attracting investors seeking a long-term preserve of wealth.
4. **Growing Network Effects & Security:** Bitcoin’s network continues to expand in terms of users, transaction volume, and hash rate (network security). This robust and decentralized infrastructure underpins its utility and resilience, reinforcing its value proposition as a trusted global monetary network.
5. **Increasing Regulatory Clarity:** While uneven globally, the trend towards clearer regulatory frameworks for digital assets, particularly Bitcoin, fosters greater investor confidence and facilitates broader adoption by institutions and corporations.

4. Competitive/Peer Analysis

Bitcoin operates within a unique asset class, often drawing comparisons to traditional commodities and other cryptocurrencies. We assess its positioning against Gold (traditional store of value) and Ethereum (leading smart contract platform).

Bitcoin vs. Gold

• **Scarcity:** Both Bitcoin and Gold are scarce assets. Gold’s scarcity is geological, while Bitcoin’s is programmatic (21 million coin cap). Bitcoin’s supply schedule is fully transparent and predictable, unlike Gold.
• **Portability & Divisibility:** Bitcoin has a distinct advantage in portability (transferable globally in minutes) and divisibility (into 100 million satoshis), far exceeding physical Gold.
• **Verifiability:** Bitcoin’s authenticity is cryptographically verifiable on its blockchain; Gold’s requires assays.
• **Decentralization:** Both are decentralized, but Bitcoin’s digital nature removes reliance on physical storage and centralized custodians typically associated with large Gold holdings.
• **Market Cap:** Gold’s market cap (estimated >€13 trillion) significantly dwarfs Bitcoin’s (~€1.5 trillion), indicating substantial room for Bitcoin to capture market share if its “digital gold” narrative continues to gain traction.
• **Volatility:** Bitcoin remains significantly more volatile than Gold, reflecting its earlier stage of market maturity and higher speculative interest.

Bitcoin vs. Ethereum

• **Purpose:** Bitcoin is primarily designed as a decentralized, scarce digital store of value and peer-to-peer electronic cash. Ethereum is a smart contract platform, enabling decentralized applications (dApps), NFTs, and DeFi.
• **Consensus Mechanism:** Bitcoin uses Proof-of-Work (PoW) for security. Ethereum transitioned to Proof-of-Stake (PoS) with its “Merge” update, which changed its energy consumption profile and supply dynamics.
• **Supply Dynamics:** Bitcoin has a fixed supply cap of 21 million. Ethereum’s supply is not capped, but it employs an economic model with issuance and burn mechanisms aimed at making it deflationary under certain network conditions.
• **Utility:** Bitcoin’s utility is primarily monetary. Ethereum’s utility is broader, serving as the foundational layer for a vast ecosystem of decentralized applications and innovation.
• **Decentralization & Security:** Bitcoin is generally considered more decentralized and robust in terms of network security due to its long-standing PoW mechanism and global distribution of mining power. Ethereum’s PoS, while more energy-efficient, has different decentralization and security considerations.
• **Correlation:** While both are cryptocurrencies and often move in tandem, their fundamental value propositions and use cases differ, leading to distinct investment theses for each.

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

Estimates for Bitcoin differ from traditional equity analysis as there are no earnings or revenue. Instead, we focus on network adoption, security, and transaction utility metrics as proxies for value creation and growth.

Key Network Metric Assumptions (Year-over-Year Growth Rates)

• **Daily Active Addresses:**
  • Year 1 (mid-2024 to mid-2025): +15% (driven by ETF adoption and new users)
  • Year 2 (mid-2025 to mid-2026): +20% (acceleration due to broader institutional integration)
  • Year 3 (mid-2026 to mid-2027): +18% (continued mainstream adoption, global reach)
• **Daily Transaction Count:**
  • Year 1: +10% (post-halving, initial ETF liquidity)
  • Year 2: +18% (increased utility, Lightning Network growth)
  • Year 3: +15% (scaling solutions mature, broader merchant adoption)
• **Average Transaction Value (EUR):**
  • Year 1: +8% (initial price appreciation, larger institutional transactions)
  • Year 2: +12% (continued institutional flows, increased high-value transfers)
  • Year 3: +10% (stability in larger transfers, growing micro-transactions)
• **Network Hash Rate (Security Proxy):**
  • Year 1: +10% (miner adaptation post-halving, increased efficiency)
  • Year 2: +15% (rising BTC price incentives, new hardware deployment)
  • Year 3: +12% (continued investment in mining infrastructure)

Qualitative Assumptions

• **Regulatory Environment:** Expect increasing clarity and acceptance of Bitcoin, especially in Western markets, but potential for restrictive measures in some jurisdictions remains.
• **Technological Advancement:** Continued development of Layer 2 solutions (e.g., Lightning Network) enhancing scalability and transaction speed for everyday use.
• **Macroeconomic Stability:** Assumption of no severe global recession or financial crisis that would significantly impair investor risk appetite. However, Bitcoin could also act as a safe haven in such scenarios.
• **Competitive Landscape:** Bitcoin maintains its dominance as the primary “digital gold” and decentralized store of value, despite the emergence of new cryptocurrencies and CBDCs.

6. Valuation

Valuing Bitcoin requires a blend of traditional scarcity models, network-centric metrics, and an understanding of its unique economic properties. We utilize the Stock-to-Flow model, NVT Ratio, and network effects for our assessment.

Stock-to-Flow (S2F) Model

The Stock-to-Flow model values scarce assets based on their existing supply (“stock”) versus the rate at which new supply enters the market (“flow”). Bitcoin’s programmed halving events directly impact its flow, making it particularly amenable to this model.

• **Current Circulating Supply (Estimated):** ~19.7 million BTC (Source: General knowledge, 2024)
• **Annual Flow (Pre-Halving, ~May 2020 – April 2024):** 328,500 BTC/year (900 BTC/day * 365 days)
• **Pre-Halving S2F Ratio:** 19,700,000 / 328,500 = ~60
• **Annual Flow (Post-Halving, April 2024 onwards):** 164,250 BTC/year (450 BTC/day * 365 days)
• **Post-Halving S2F Ratio:** 19,700,000 / 164,250 = ~120

The doubling of the S2F ratio post-halving significantly increases Bitcoin’s scarcity relative to Gold, which has an S2F ratio of approximately 60. The model suggests that an S2F of 120 historically correlates with a significantly higher market valuation. While not a precise predictor, the S2F model underscores Bitcoin’s fundamental value proposition as an ultra-scarce asset. This increased scarcity, combined with growing demand, supports our positive price target.

NVT Ratio (Network Value to Transaction Volume)

The NVT ratio is analogous to a P/E ratio for a stock, comparing Bitcoin’s market capitalization (Network Value) to its on-chain transaction volume (proxy for “earnings” or utility). A high NVT ratio can indicate overvaluation, while a low ratio may suggest undervaluation.

• **Market Cap (Network Value):** €1,504,128,214,784.37 (Source: CoinGecko)
• **24h Exchange Volume (Proxy for NVT calculation due to data constraints):** €33,201,496,403.60 (Source: CoinGecko)
• **Calculated NVT Proxy:** €1,504,128,214,784.37 / €33,201,496,403.60 = ~45.3

Note: The strict NVT ratio uses *on-chain transaction volume* (the value of BTC transacted on the blockchain), not exchange trading volume. Due to data limitations in the prompt, we use the provided 24h exchange volume as a proxy for market activity, acknowledging it is not the precise on-chain NVT.

A proxy NVT of ~45.3 is moderate. Historically, NVT has fluctuated significantly. While high market cap relative to transaction volume can signal overextension, current institutional adoption and a growing focus on Bitcoin as a long-term store of value rather than just a medium of exchange means transaction volume may not fully capture its utility. Furthermore, a substantial amount of Bitcoin is held off-exchange, reducing visible transaction volume, which can distort this specific proxy metric. A rising number of long-term holders also compresses typical transaction velocity. We view the current NVT contextually, balanced against strong demand drivers.

Network Effects

Bitcoin’s value is significantly enhanced by Metcalfe’s Law, which states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n²). For Bitcoin:

• **User Growth:** As more individuals, institutions, and applications utilize Bitcoin, its utility and security increase, driving further adoption.
• **Developer Activity:** A vibrant developer community continuously improves the core protocol and its surrounding ecosystem (e.g., Lightning Network), enhancing Bitcoin’s functionality and long-term viability.
• **Liquidity & Infrastructure:** Increased adoption leads to greater liquidity, more robust exchanges, better custody solutions, and wider payment acceptance, forming a powerful virtuous cycle that reinforces its value.

The exponential growth potential stemming from these network effects is a key driver for long-term price appreciation, particularly as institutional on-ramps reduce friction for new participants.

Price Target Justification (€94,185)

Our 12-month price target of €94,185 represents a ~25% upside from current levels. This is derived from:

• **Post-Halving Price Cycles:** Historical data suggests significant rallies following halvings, driven by supply reduction.
• **Institutional Demand Growth:** We project continued, strong inflows from spot Bitcoin ETFs and other institutional vehicles throughout the next 12 months, building on current momentum and anticipating acceleration towards 2026.
• **Market Cap Expansion:** As Bitcoin’s “digital gold” narrative solidifies and it captures a greater share of global store-of-value assets, its market capitalization is expected to expand. We anticipate an increase in market cap reflecting a more mature valuation for this asset class.
• **NVT & S2F Alignment:** While the NVT proxy provides a snapshot, the robust implications of the S2F model post-halving strongly suggest upward price pressure. Our target implies a healthy increase in market value commensurate with its increased scarcity and adoption trajectory.

7. Key Risks

Investing in Bitcoin carries significant risks that investors should carefully consider:

• **Regulatory Uncertainty:** The global regulatory landscape for cryptocurrencies remains fragmented and evolving. Adverse regulatory actions, outright bans, or stringent taxation policies in major economies could significantly impact Bitcoin’s price and adoption.
• **Price Volatility:** Bitcoin is notoriously volatile, experiencing large and rapid price swings. This volatility is driven by speculative trading, news events, and its relatively smaller market capitalization compared to traditional assets. Investors must be prepared for substantial capital fluctuations.
• **Competition & Technological Obsolescence:** While Bitcoin is dominant, competition from other cryptocurrencies (altcoins) offering different features or central bank digital currencies (CBDCs) could impact its market share and utility. Future technological advancements (e.g., quantum computing) could theoretically challenge its underlying cryptography, though this is a long-term, low-probability risk.
• **Security Risks & Hacks:** While the Bitcoin protocol itself is robust, exchanges, wallets, and individual custody practices are vulnerable to hacking, theft, and operational failures. Loss of private keys can result in irreversible loss of funds.
• **Market Manipulation:** The cryptocurrency market is susceptible to manipulation, including “whale” movements, pump-and-dump schemes, and algorithmic trading strategies that can exacerbate volatility.
• **Environmental Concerns (ESG):** Bitcoin’s Proof-of-Work consensus mechanism is energy-intensive, raising environmental (ESG) concerns. Increased regulatory scrutiny or investor pressure on energy consumption could impact its narrative and adoption.
• **Network Congestion & Transaction Fees:** During periods of high network demand, transaction fees can rise significantly, and confirmation times can increase, potentially hindering its utility as a medium of exchange.
• **Macroeconomic Headwinds:** A severe global economic downturn, tight monetary policy, or a significant loss of confidence in digital assets could lead to a broad sell-off across all risk assets, including Bitcoin.

8. Appendix

Glossary

• **Bitcoin (BTC):** The original decentralized digital currency, operating on a peer-to-peer network.
• **Halving:** A programmed event in Bitcoin’s protocol, occurring approximately every four years, which reduces the reward for mining new blocks by half, thereby cutting the rate of new Bitcoin supply.
• **Hash Rate:** A measure of the total computational power being used to mine and process transactions on a Proof-of-Work blockchain, indicating network security.
• **Market Capitalization (Market Cap):** The total value of all Bitcoin in circulation (Current Price x Circulating Supply).
• **NVT Ratio (Network Value to Transaction Volume):** A valuation metric comparing Bitcoin’s market cap to its daily on-chain transaction volume, used as a proxy for network utility.
• **Proof-of-Work (PoW):** The consensus mechanism used by Bitcoin, where miners compete to solve complex puzzles to validate transactions and add new blocks to the blockchain.
• **Stock-to-Flow (S2F):** A valuation model that quantifies the scarcity of a resource by dividing its existing circulating supply (stock) by the annual production rate (flow).
• **Spot Bitcoin ETF:** An Exchange Traded Fund that holds actual Bitcoin, offering investors exposure to the asset without direct ownership.

Analyst Certification

The undersigned certifies that the views expressed in this research report accurately reflect the analyst’s personal views about the subject security(ies) and issuer(s). No part of the analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report.

Disclaimer

This report is for informational purposes only and does not constitute investment advice. Investing in cryptocurrencies is highly speculative and involves a risk of loss. Past performance is not indicative of future results. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.

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