Initiation of Coverage: Bitcoin (BTC_EUR)

1. Key Data & Forecast Snapshot

We initiate coverage of Bitcoin (BTC_EUR) with a Buy rating and a 12-month price target of €88,000. Our outlook reflects Bitcoin’s strengthening position as a digital store of value, driven by accelerating institutional adoption, persistent scarcity dynamics, and expanding network effects.

• Current Price: €75394
• Market Capitalization: €1,505.88 Billion
• 24h Volume: €32.46 Billion
• 24h Change: +1.31%
• Rating: Buy (Initiating)
• 12-Month Price Target: €88,000
• Potential Upside: +16.7% (Calculation: (€88000 – €75394) / €75394 = 0.1672 = 16.7%)
• Investment Horizon: Long-term (12-24 months)
• Key Catalysts: Ongoing institutional ETF inflows, continued post-halving price discovery, increasing real-world utility, clearer regulatory frameworks.
• Key Risks: Regulatory uncertainty, significant price volatility, emergence of superior technologies, macroeconomic headwinds.

2. Investment Thesis

Bitcoin stands at a critical juncture, transitioning from a niche asset to a recognized component of diversified investment portfolios. We believe the current environment presents a compelling “why now” moment for investors:

• Accelerated Institutional Integration

  The approval and subsequent success of spot Bitcoin ETFs in major markets have unlocked significant institutional capital, providing regulated access and enhanced liquidity. News reports confirm a surge in institutional demand, with major financial institutions like JPMorgan enabling crypto trading for clients. This mainstream validation is crucial for broader adoption and price appreciation.

• Scarcity-Driven Value Proposition

  Bitcoin’s programmatic scarcity, culminating in the quadrennial “halving” events, ensures a diminishing supply issuance. The most recent halving has further tightened new supply, historically leading to upward price pressure as demand outstrips new issuance. This fixed supply cap of 21 million BTC reinforces its “digital gold” narrative.

• Emerging Store of Value Narrative

  Against a backdrop of global inflationary pressures and geopolitical uncertainty, Bitcoin is increasingly viewed as a viable hedge. Its decentralized, permissionless nature offers a distinct alternative to traditional fiat currencies and even gold, particularly for investors seeking censorship resistance and global transferability.

• Expanding Network Effects and Infrastructure

  The Bitcoin network continues to mature, with growing adoption among users, developers, and businesses. Developments in Layer 2 solutions (e.g., Lightning Network) enhance its scalability and utility, facilitating faster and cheaper transactions. This expanding ecosystem underpins Bitcoin’s long-term value accretion.

3. Investment Positives

Our positive outlook on Bitcoin is underpinned by several key drivers, ranked by their immediate and long-term impact:

1. Institutional Adoption & ETF Inflows

   • Spot Bitcoin ETFs have democratized access for institutional and retail investors within regulated frameworks.
   • Significant capital inflows from these vehicles provide sustained buying pressure and reduce market fragmentation.
   • Traditional financial institutions are increasingly integrating Bitcoin services (e.g., JPMorgan enabling crypto trading for institutional clients).
   • Increased institutional engagement boosts credibility and stability for the asset class.

2. Scarcity & Halving Cycle Dynamics

   • Bitcoin’s fixed supply cap of 21 million coins and predictable issuance schedule (halving every ~4 years) creates inherent scarcity.
   • The recent halving (April 2024) reduced new Bitcoin supply by 50%, historically preceding significant price appreciation cycles.
   • The Stock-to-Flow model suggests that increasing scarcity correlates with higher long-term value.

3. Macroeconomic Hedging & Digital Gold Narrative

   • Bitcoin is increasingly perceived as a hedge against inflation and currency debasement due to its decentralized nature and fixed supply.
   • It offers a non-sovereign, censorship-resistant alternative to traditional safe-haven assets in times of geopolitical instability.
   • The ability to store and transfer value globally without intermediaries is a significant advantage.

4. Network Effects & Infrastructure Development

   • Growing user base, developer activity, and merchant acceptance contribute to Metcalfe’s Law, where the network’s value increases quadratically with the number of users.
   • Development of Layer 2 scaling solutions (e.g., Lightning Network) improves transaction speed and reduces fees, enhancing practical utility.
   • Increasing hash rate demonstrates robust network security and miner confidence.

5. Global Accessibility & Censorship Resistance

   • Bitcoin allows for permissionless transfers across borders, offering financial sovereignty.
   • Accessible to anyone with an internet connection, fostering financial inclusion in underserved regions.
   • Its decentralized structure makes it resistant to government or corporate censorship, protecting asset integrity.

4. Competitive/Peer Analysis

Bitcoin operates within a unique asset class, often drawing comparisons to traditional commodities and other digital assets. We analyze its position relative to Gold and Ethereum.

• vs. Gold (XAU)

  • Similarities: Both are considered stores of value, hedges against inflation, and have limited supply.
  • Bitcoin’s Advantages:
    • Digital Scarcity: Absolute fixed supply (21M BTC) vs. ongoing, albeit slow, discovery for gold.
    • Portability & Divisibility: Easily transferable globally and divisible into tiny fractions (€0.00000075), unlike physical gold.
    • Verifiability: Authenticity is cryptographically provable; no need for assays.
    • Storage Costs: Virtually zero, contrasting with significant costs for physical gold storage.
    • Programmability: Underlying blockchain technology allows for future innovations and integration.
  • Gold’s Advantages:
    • Long History: Thousands of years of proven track record as a store of value.
    • Physical Utility: Industrial and jewelry demand.
    • Lower Volatility: Generally less volatile than Bitcoin, though still susceptible to market forces.
  • Conclusion: Bitcoin represents a “digital native” evolution of gold’s store-of-value properties, with superior digital attributes for the modern economy.

• vs. Ethereum (ETH)

  • Similarities: Both are leading cryptocurrencies, utilizing blockchain technology, and subject to market volatility.
  • Bitcoin’s Role: Primarily a store of value, “digital gold.” Focuses on security, decentralization, and predictable monetary policy.
  • Ethereum’s Role: A programmable blockchain platform (“digital oil”) for decentralized applications (dApps), smart contracts, DeFi, and NFTs. Focuses on utility and innovation.
  • Key Differentiators:
    • Monetary Policy: Bitcoin has a fixed supply cap; Ethereum has a variable supply with a burning mechanism and staking rewards.
    • Consensus Mechanism: Bitcoin uses Proof-of-Work (PoW); Ethereum transitioned to Proof-of-Stake (PoS).
    • Use Case: Bitcoin is a commodity/currency; Ethereum is a platform/utility token.
  • Conclusion: Bitcoin and Ethereum are complementary assets. Bitcoin secures the base layer of digital scarcity, while Ethereum builds a versatile application layer on top of blockchain technology. Investors may hold both for different objectives.

5. Estimates & Operating Assumptions

Given Bitcoin’s nature as a decentralized asset without traditional “operations,” our estimates focus on price trajectory driven by adoption, scarcity, and macro factors. These are our forward-looking price forecasts (GS Estimates based on general knowledge 2024/2025/2026):

• Bitcoin Price Forecasts (GS Estimates)

  • End 2024: €88,000
    • Rationale: Reflects continued strong institutional ETF inflows, sustained momentum from the recent halving event, and broader market acceptance. We anticipate some consolidation following rapid gains, but overall positive sentiment.
  • End 2025: €110,000
    • Rationale: Projects continued growth driven by broader integration into traditional financial products, potential for clearer global regulatory frameworks, and increasing retail adoption through institutional gateways. Anticipate a more mature asset class with consistent, though potentially less explosive, growth.
  • End 2026: €135,000
    • Rationale: Further maturation of the Bitcoin market, widespread acceptance as an investable asset, and sustained network development. Assumes a stable macroeconomic environment conducive to risk assets and continued erosion of FUD (Fear, Uncertainty, Doubt) surrounding digital assets.

6. Valuation

Traditional valuation metrics (e.g., P/E, DCF) are not applicable to Bitcoin. Instead, we rely on a blend of scarcity models, network effect principles, and relative valuation to justify our price target.

• Network Value to Transactions (NVT) Ratio

  • Concept: Analogous to a P/E ratio for traditional stocks, comparing Bitcoin’s market capitalization (Network Value) to the value of transactions processed on its blockchain (Transactions).
  • Interpretation: A high NVT ratio suggests the network’s value is growing faster than its utility (overvalued), while a low NVT ratio suggests potential undervaluation.
  • Current Context: While real-time data is dynamic, NVT typically surges during bull markets (value outpaces current utility) and normalizes during consolidation. Our target assumes NVT remains within a historically justifiable range, reflecting increasing utility alongside market cap growth.

• Stock-to-Flow (S2F) Model

  • Concept: This model quantifies Bitcoin’s scarcity by dividing the existing supply (stock) by the annual new supply (flow). Higher S2F values indicate greater scarcity.
  • Relevance: Bitcoin’s S2F ratio increases significantly with each halving event. The model posits a direct correlation between increasing scarcity and asset value, making Bitcoin highly predictable in its supply-side economics.
  • Implication: Post-halving, Bitcoin’s S2F ratio has moved into a new, higher bracket, historically correlated with higher price levels. This fundamental scarcity is a core driver of our long-term positive outlook.

• Network Effects (Metcalfe’s Law)

  • Concept: The value of a telecommunications network is proportional to the square of the number of connected users. For Bitcoin, this translates to the increasing value derived from a growing user base, developer community, and expanding infrastructure.
  • Application: As more institutions adopt Bitcoin, more users participate, and more applications are built on its network, its overall value and utility compound. This organic growth provides a strong long-term foundation for price appreciation.

• Target Price Derivation

  Our 12-month price target of €88,000 is derived from a composite view:

  • Scarcity Premium: Acknowledging the post-halving S2F increase and the resulting supply shock.
  • Institutional Inflow Trajectory: Projecting continued capital allocation via ETFs and direct investments.
  • Relative Valuation: Assessing Bitcoin’s growing market share and narrative strength relative to gold and other digital assets.
  • Macro Factors: Incorporating expectations of ongoing global liquidity, moderate inflation, and increasing demand for decentralized assets.
  • Conservative Growth: While Bitcoin can be highly volatile, our target implies a sustainable, mid-teens percentage upside over 12 months, balancing potential for significant gains with inherent market risks. (Current Price €75394 * 1.167 = €88000).

7. Key Risks

While our outlook is positive, several key risks could impact Bitcoin’s price trajectory:

• Regulatory Uncertainty

  • Lack of a unified global regulatory framework creates uncertainty. Varying approaches by different jurisdictions could impact institutional adoption, market access, and operational costs for crypto businesses.
  • Risk of adverse regulatory actions, outright bans in some regions, or unfavorable tax treatments.

• Price Volatility

  • Bitcoin is highly volatile, prone to rapid and significant price swings driven by market sentiment, news, and macroeconomic events.
  • Sudden market corrections or “crypto winters” can lead to substantial capital losses.

• Competition

  • Competition from other cryptocurrencies (altcoins) offering alternative features or perceived superior technology.
  • Potential emergence of central bank digital currencies (CBDCs) could impact Bitcoin’s role, though these are fundamentally centralized and distinct.

• Technological Risks

  • While the Bitcoin protocol has proven robust, risks include potential software bugs, network vulnerabilities, or successful attacks on the underlying cryptography (e.g., quantum computing advancements).
  • Security breaches at exchanges, custodians, or individual wallets remain a threat.

• Macroeconomic Headwinds

  • Tightening monetary policy, higher interest rates, or a global recession could reduce investor appetite for risk assets like Bitcoin.
  • Increased correlation with traditional equity markets during periods of stress could negate its diversification benefits.

• Environmental Concerns

  • The energy consumption associated with Bitcoin’s Proof-of-Work mining could attract increased regulatory scrutiny and negative ESG sentiment, potentially impacting institutional adoption.
  • Pressure to shift to more sustainable energy sources or alternative consensus mechanisms.

8. Appendix

Compliance: This report has been generated by an Artificial Intelligence (AI) model based on provided market data, news, and pre-trained financial knowledge. While every effort has been made to ensure accuracy and a professional tone, it is not financial advice. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. Live market data is accurate as of the time of generation but is subject to change rapidly.

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.