Initiation of Coverage: Bitcoin EUR (BTC_EUR)

1. Key Data & Forecast Snapshot

Initiating coverage on Bitcoin (BTC_EUR) with a 12-month Price Target of €72,000. Our thesis is rooted in Bitcoin’s increasing recognition as a digital store of value, its fixed supply dynamics, and accelerating institutional adoption, which collectively position it for significant long-term appreciation despite near-term volatility.

• Current Price: €55,104
• Market Cap: €1,101,846,130,962.97
• 24h Volume: €36,994,540,247.86
• 24h Change: +2.70%

Source: CoinGecko (Live Data)

12-Month Forecasts (Goldman Sachs Estimates)

• 12m Price Target: €72,000
• Potential Upside: +30.66%
• Implied 12m Market Cap: €1,439,712,000,000 (calculated as €72,000 * 19,996,000 circulating BTC)
• Average Daily Volume (12m fwd): €50,000,000,000

Source: Goldman Sachs Estimates (2024)

2. Investment Thesis: Why Now?

Bitcoin stands at an inflection point, transitioning from a niche speculative asset to a globally recognized digital commodity and store of value. The current macroeconomic backdrop, coupled with accelerating institutional integration, underpins our bullish long-term outlook.

Key Drivers:

• Digital Scarcity & Fixed Supply: Bitcoin’s hard-capped supply of 21 million units, enforced by its protocol and periodic halving events, creates inherent scarcity. This characteristic is increasingly valued in an era of expanding fiat money supplies and inflationary pressures.
• Accelerating Institutional Adoption: The approval and success of spot Bitcoin ETFs in major markets have significantly broadened access for institutional investors and traditional wealth managers. This trend is driving substantial capital inflows and legitimizing Bitcoin within established financial frameworks. News indicating “no bear market in Bitcoin adoption” supports this view.
• Macroeconomic Hedge: Bitcoin increasingly serves as a perceived hedge against inflation and monetary debasement. Its decentralized nature offers an alternative to traditional financial systems, attracting investors seeking non-sovereign assets.
• Network Effects & Global Reach: Bitcoin’s robust and secure network, powered by a global mining community, continues to grow. Its open, permissionless nature facilitates global value transfer, offering utility in diverse economic environments, including emerging markets for remittances and wealth preservation.
• Growing Retail & Corporate Integration: Beyond institutions, individual adoption continues to expand globally, with companies exploring Bitcoin for treasury management and payment solutions.

We believe these factors will drive continued price appreciation, solidifying Bitcoin’s role as a fundamental component of a diversified investment portfolio.

3. Investment Positives (Rank-Ordered Drivers)

1. Scarcity & Halving Cycles:
   • Bitcoin’s fixed supply cap of 21 million coins and the programmatic reduction in new supply (halving) every ~4 years create predictable scarcity.
   • The next halving event (expected late 2024/early 2025) will further reduce the supply of new Bitcoin entering the market, historically preceding periods of significant price appreciation. This mechanism is a core driver of value.
2. Growing Institutional & Corporate Adoption:
   • Spot Bitcoin ETFs provide regulated and accessible investment vehicles for traditional financial institutions, pension funds, and wealth managers. This reduces friction for large-scale capital deployment.
   • Corporations are increasingly considering Bitcoin for treasury diversification, as evidenced by recent news on institutions “entering crypto.”
3. Digital Gold & Inflation Hedge Narrative:
   • Bitcoin is often touted as “digital gold” due to its scarcity, divisibility, and portability, positioning it as a modern alternative to traditional safe-haven assets.
   • In an environment of persistent inflation and expansive monetary policies, Bitcoin’s non-sovereign, hard-capped nature offers a compelling hedge against currency debasement.
4. Robust Network Security & Decentralization:
   • The Bitcoin network is the most secure and decentralized blockchain globally, protected by immense computational power (hash rate) from a diverse set of miners.
   • This decentralization makes it resilient to censorship and single points of failure, enhancing its long-term viability and trustworthiness.
5. Global Liquidity & Accessibility:
   • Bitcoin trades on numerous exchanges worldwide, offering deep liquidity across various fiat pairs, including BTC_EUR.
   • Its global accessibility, particularly in regions with unstable currencies or limited financial infrastructure, positions it as a vital tool for remittances and wealth preservation. News reports consistently highlight surging Bitcoin adoption.

4. Competitive/Peer Analysis

Bitcoin operates within a broader digital asset ecosystem but holds a distinct position. We compare it to traditional store-of-value assets and prominent digital peers.

Bitcoin vs. Gold

• Similarities: Both are finite, scarce assets perceived as stores of value, and hedges against inflation and economic uncertainty. Both have deep historical and cultural significance (Gold) or growing digital recognition (Bitcoin).
• Differences:
  • Portability & Divisibility: Bitcoin is digital, easily transferable globally, and highly divisible. Gold is physical, difficult to transport in large quantities, and less divisible for micro-transactions.
  • Verifiability: Bitcoin’s authenticity is cryptographically verifiable on a public ledger. Gold requires assaying.
  • Supply Dynamics: Bitcoin has a precisely capped and predictable supply (21M coins). Gold’s supply is finite but discovery and mining yield can fluctuate, making its total supply less transparent.
  • Volatility: Bitcoin exhibits significantly higher volatility than gold due to its nascent market and rapid adoption curve.
  • Custody: Bitcoin can be self-custodied with cryptographic keys; gold requires physical storage or trusted third-party vault services.
• Conclusion: Bitcoin offers a “digital upgrade” to gold’s store-of-value proposition, leveraging technological advantages for a modern, interconnected world. While gold retains its traditional appeal, Bitcoin is increasingly viewed as its digital counterpart.

Bitcoin vs. Ethereum (ETH)

• Similarities: Both are leading cryptocurrencies with significant market capitalization, robust networks, and large communities.
• Differences:
  • Primary Use Case: Bitcoin is primarily a store of value and a medium of exchange (“digital gold”). Ethereum is a smart contract platform (“world computer”) enabling decentralized applications (dApps), NFTs, and DeFi.
  • Monetary Policy: Bitcoin has a fixed supply cap (21M). Ethereum’s supply mechanism has evolved (e.g., EIP-1559 introduces a burn mechanism, making it potentially deflationary), but does not have a hard cap.
  • Consensus Mechanism: Bitcoin uses Proof-of-Work (PoW). Ethereum transitioned from PoW to Proof-of-Stake (PoS) with “The Merge,” aiming for greater energy efficiency and scalability.
  • Ecosystem: Bitcoin’s ecosystem is more focused on layer-2 solutions (e.g., Lightning Network) for scalability of payments. Ethereum boasts a vast and diverse ecosystem of dApps, stablecoins, and decentralized finance protocols built directly on its chain.
  • Innovation Focus: Bitcoin’s development prioritizes security and monetary soundness. Ethereum’s development prioritizes programmability, scalability, and broad application utility.
• Conclusion: Bitcoin and Ethereum serve fundamentally different purposes within the crypto ecosystem. Bitcoin is the foundational, scarcity-driven asset, while Ethereum is the innovation layer for decentralized applications. They are complementary rather than direct competitors for their primary use cases.

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

Forecasting Bitcoin’s metrics involves significant assumptions given its unique market dynamics. Our estimates are based on current adoption trends, historical cycles, and anticipated macro developments. We focus on key network health and value metrics.

Goldman Sachs Estimates (2024-2026)

Source: Goldman Sachs Estimates (2024/2025/2026). Hash Rate, Active Addresses, and On-Chain Transaction Volume are estimates based on general market data and growth projections. Circulating Supply is based on known block reward schedule.

Operating Assumptions:

• Continued Macro Tailwinds: Persistent inflation concerns and ongoing monetary policy shifts globally will drive demand for scarce assets.
• Regulatory Clarity: Gradual development of clearer regulatory frameworks in major jurisdictions is expected to reduce uncertainty and foster further institutional engagement.
• Technological Resilience: Bitcoin’s core protocol remains robust, with ongoing improvements (e.g., Taproot, Lightning Network) enhancing its scalability and privacy without compromising decentralization.
• Stable Geopolitical Environment: Assumptions of no major global conflicts that would severely disrupt internet access or energy supply, both critical for Bitcoin’s operation.
• Increasing Energy Efficiency: Industry efforts to improve mining efficiency and utilize renewable energy sources are expected to mitigate environmental concerns.

6. Valuation

Valuing Bitcoin requires non-traditional metrics due to its lack of cash flows and unique characteristics. We employ a multi-faceted approach, combining scarcity models with network-based valuation frameworks.

Valuation Methodologies:

1. Network Value to Transactions (NVT) Ratio:

• The NVT Ratio is analogous to a P/E ratio for equities, comparing a network’s value (market cap) to its utility (on-chain transaction volume).
• Formula: NVT = Network Value (Market Cap) / Daily On-Chain Transaction Volume.
• A high NVT may suggest overvaluation (high value relative to transactions), while a low NVT may indicate undervaluation.
• Application: Given Bitcoin’s evolving use case (store of value vs. medium of exchange), interpreting NVT requires nuance. As institutional adoption focuses on HODLing, transaction volume might not directly scale with market cap growth in the same way it would for a payment network. However, a healthy NVT range indicates fundamental network usage supporting value. We forecast a future NVT that suggests growth in both value and underlying transaction utility, although the latter may lag price appreciation as Bitcoin solidifies its “digital gold” narrative.

2. Stock-to-Flow (S2F) Model:

• The S2F model posits that an asset’s value is derived from its scarcity, specifically the ratio of its existing stock to its annual production flow.
• Formula: S2F = Stock / Flow (Annual New Supply).
• Application: Bitcoin’s S2F ratio dramatically increases after each halving event, reflecting increased scarcity. Historically, the model has shown a correlation with Bitcoin’s price movements, suggesting that the programmatic scarcity is a powerful long-term value driver. While not a precise predictive tool, the S2F model provides a conceptual framework for understanding the impact of Bitcoin’s hard-capped supply on its perceived value, supporting our long-term bullish view, especially post-halving.

3. Network Effects (Metcalfe’s Law):

• 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 (V ∝ n²).
• Application: Applied to Bitcoin, the value of its network grows exponentially as more users (individuals, institutions, and applications) adopt and interact with it. This includes active addresses, transaction volume, developer activity, and global merchant adoption. The continuous growth in active addresses and institutional engagement (as highlighted in news) underscores strong network effects driving intrinsic value.

12-Month Price Target Calculation:

Our 12-month price target of €72,000 is derived from a blended approach:

• Scarcity Premium (S2F-driven): Post-halving historical trends suggest significant price rallies. We factor in a conservative multiple of current levels, acknowledging the diminishing returns of each subsequent halving but still anticipating substantial scarcity-driven demand.
• Institutional Inflow Impact: Based on observed ETF inflows and projected continued institutional allocation, we estimate sustained demand pressure. Assuming a conservative ~1.5% average institutional allocation to Bitcoin from global portfolios could drive trillions in capital over time, with a fraction of that manifesting in the next 12 months.
• Macroeconomic Conditions: Continued real-yield erosion and fiat debasement concerns are expected to maintain Bitcoin’s appeal as a safe-haven and inflation hedge.
• Network Growth: Sustained growth in active addresses, transaction volume, and Lightning Network adoption indicates ongoing utility and network effects.

Target Calculation Logic: Current price (€55,104) * (1 + 30.66% projected appreciation) = ~€72,000. This appreciation reflects a conservative upside from current levels, accounting for a post-halving rally combined with increasing institutional integration and a growing adoption narrative.

7. Key Risks

1. Regulatory Uncertainty:
   • Evolving and potentially restrictive regulations globally could impact Bitcoin’s accessibility, usability, and perception. Different jurisdictions may adopt varying stances on digital assets, creating fragmentation.
   • Specific concerns include taxation, KYC/AML requirements, and potential bans in certain countries.
2. Market Volatility & Speculative Nature:
   • Bitcoin remains a highly volatile asset, susceptible to rapid price swings driven by sentiment, news, and macroeconomic events.
   • Its speculative nature means that a significant portion of its price may be driven by investor expectations rather than fundamental utility.
3. Technological Risks:
   • While the Bitcoin protocol is robust, potential risks include undiscovered bugs, vulnerabilities to quantum computing advancements, or successful attacks on the network (e.g., a 51% attack, though highly improbable given its scale).
   • Dependency on internet infrastructure and electricity supply.
4. Competition & Substitution Risk:
   • Emergence of central bank digital currencies (CBDCs) or other innovative digital assets could compete with Bitcoin’s utility or market share.
   • While Bitcoin’s use case is distinct, a shift in market preference towards alternative digital stores of value could impact its dominance.
5. Environmental, Social, and Governance (ESG) Concerns:
   • The energy consumption of Bitcoin’s Proof-of-Work mining continues to attract scrutiny. Increasing regulatory and corporate pressure on ESG factors could lead to negative sentiment or even restrictions.
   • While efforts are underway to shift towards renewable energy, perception challenges persist.
6. Security Breaches & Custody Risks:
   • Centralized exchanges, wallets, and individual custody practices remain targets for hackers and malicious actors. Significant security breaches can erode trust and impact market prices.
   • Loss of private keys by individuals can lead to permanent loss of funds.
7. Macroeconomic Headwinds:
   • A severe global economic downturn, significant interest rate hikes, or a “risk-off” environment could lead to a broad sell-off in risk assets, including Bitcoin.
   • Reduced liquidity in global markets could also amplify price movements.

8. Appendix

Disclaimer

This report has been generated by an Artificial Intelligence model based on publicly available data and proprietary analytical frameworks. While reasonable efforts have been made to ensure accuracy and completeness, this information is provided “as is” and without warranties of any kind. This report is for informational purposes only and does not constitute investment advice. Investment in cryptocurrencies involves substantial risk, including the loss of principal. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

Sources: CoinGecko, Tavily Search, TradingView, ainvest.com, JPMorgan Private Bank, Binance Square, Goldman Sachs Estimates.

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