Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Key Data & Forecast Snapshot

Goldman Sachs initiates coverage of Bitcoin EUR (BTC_EUR) with a Neutral rating and a 12-month price target range of €105,000 – €115,000. Our outlook is driven by increasing institutional adoption, continued network effects, and Bitcoin’s evolving role as a digital store of value, balanced by inherent volatility and regulatory uncertainties.

• Current Price: €75453 (Source: CoinGecko)
• Market Cap: €1,506.6 Billion (Source: CoinGecko)
• 24h Volume: €31.9 Billion (Source: CoinGecko)
• 24h Change: +1.43% (Source: CoinGecko)

12-Month Forecasts (Goldman Sachs Estimates)

• Price Target Range: €105,000 – €115,000
• Mid-Point Target Price: €110,000
• Implied Upside (Mid-Point): +45.8%
• Forecasted Market Cap: €2,096.7 Billion – €2,296.3 Billion

  (Calculation: Circulating Supply ~19,968,600 BTC * Price Target Range)

• Forecasted 24h Volume: €38 Billion – €42 Billion

Investment Thesis

Bitcoin: A Maturing Digital Store of Value Amidst Institutional Inflow

We believe Bitcoin is undergoing a significant maturation phase, transitioning from a niche, speculative asset to an increasingly recognized digital store of value. This shift is primarily driven by: (1) accelerating institutional adoption, evidenced by the launch of spot ETFs and commitments from major financial institutions like JPMorgan to facilitate crypto trading for clients; (2) its programmatic scarcity (halving cycles) which reinforces its inflation-hedge narrative; and (3) its robust, decentralized network security.

The current market environment, characterized by global geopolitical instability and evolving monetary policies, further highlights Bitcoin’s appeal as an uncorrelated asset and potential hedge. While volatility remains a key characteristic, the increasing participation of sophisticated capital is expected to contribute to greater market depth and, over time, potentially dampen extreme price swings. We project continued growth in network utility and market acceptance, supporting a long-term bullish outlook, albeit with near-term caution on volatility and regulatory headwinds.

Investment Positives

• Accelerating Institutional Adoption: The approval and success of spot Bitcoin ETFs in major jurisdictions have opened significant avenues for traditional capital allocation. News of institutions like JPMorgan entering crypto trading further legitimizes Bitcoin as an asset class. (Source: SSGA, Ainvest, Yahoo Finance)
• Scarcity & Halving Cycles: Bitcoin’s fixed supply cap of 21 million and programmed halving events (reducing new supply every four years) create inherent scarcity. This deflationary mechanism positions Bitcoin as a compelling store of value, particularly against inflationary pressures.
• Network Effects & Security: Bitcoin’s robust and decentralized network, secured by a global network of miners, continues to grow in hash rate and user adoption. Metcalfe’s Law suggests that the value of a network increases quadratically with the number of connected users, a fundamental driver for Bitcoin.
• Macroeconomic Hedge Potential: In an environment of persistent inflation concerns and geopolitical uncertainties, Bitcoin is increasingly viewed by investors as a potential hedge against traditional financial system risks and currency debasement.
• Developing Regulatory Clarity: While still evolving, global regulatory frameworks are slowly progressing, providing greater clarity and reducing uncertainty for institutional participation. This institutional “comfort” is crucial for broader adoption.

Competitive/Peer Analysis

Bitcoin vs. Gold (Digital Gold vs. Physical Gold)

• Similarities: Both are scarce, durable, fungible, and serve as stores of value. Both are often viewed as hedges against inflation and economic uncertainty.
• Differences:
  • Portability & Divisibility: Bitcoin is highly portable, easily divisible (to eight decimal places), and transferable globally with minimal friction. Gold is cumbersome to transport and store, and less divisible.
  • Verifiability: Bitcoin’s authenticity is cryptographically verifiable on its blockchain. Gold requires physical inspection and assays.
  • Decentralization: Bitcoin operates on a decentralized network, resistant to censorship and government seizure. Gold markets can be subject to government intervention and confiscation.
  • Volatility: Bitcoin historically exhibits significantly higher price volatility than gold.
  • Track Record: Gold has millennia of history as a store of value; Bitcoin’s history spans just over a decade.
• Outlook: Bitcoin is emerging as a “digital gold” alternative, particularly appealing to younger generations and digital-native investors, and offering superior utility in a digitized global economy.

Bitcoin vs. Ethereum (Store of Value vs. Decentralized Application Platform)

• Differentiation: Bitcoin’s primary function is a store of value and a peer-to-peer electronic cash system. Ethereum (ETH) is a smart contract platform, enabling decentralized applications (dApps), NFTs, and DeFi.
• Monetary Policy: Bitcoin has a fixed supply cap (21M BTC) and predictable halvings. Ethereum’s supply dynamics are more complex, with a shift to Proof-of-Stake (PoS) and a deflationary mechanism through EIP-1559 transaction fee burning.
• Network Utility: Bitcoin’s utility is largely its monetary policy and security. Ethereum’s utility is derived from its robust ecosystem of dApps and its role as the backbone of the decentralized internet.
• Outlook: Bitcoin and Ethereum are often viewed as complementary assets rather than direct competitors. Bitcoin serves as the foundational layer of digital scarcity, while Ethereum drives innovation in the broader decentralized economy.

Estimates & Operating Assumptions (Goldman Sachs Estimates)

3-Year Forward Looking

Our estimates reflect sustained growth in Bitcoin’s ecosystem, driven by increasing adoption and network security. These projections are based on Goldman Sachs analysis and current market trends (Estimate based on general knowledge 2024/2025).

• Price (Year-End, EUR):
  • 2025: €110,000
  • 2026: €140,000
  • 2027: €175,000
• Hash Rate (Exahashes per second, EH/s, Year-End): (Reflects network security and mining investment)
  • 2024 (Current Estimate): ~650 EH/s
  • 2025: 850 EH/s
  • 2026: 1,100 EH/s
  • 2027: 1,400 EH/s
• Daily Transaction Volume (EUR Billion, Avg.): (Reflects on-chain economic activity)
  • 2024 (Current Estimate): ~€1.5B
  • 2025: €2.0B
  • 2026: €2.8B
  • 2027: €3.8B
• Daily Active Addresses (Millions, Avg.): (Proxy for user adoption)
  • 2024 (Current Estimate): ~1.2M
  • 2025: 1.5M
  • 2026: 1.9M
  • 2027: 2.4M

Valuation

Valuing Bitcoin, a decentralized digital asset, differs significantly from traditional equity analysis. We utilize a combination of on-chain metrics and economic models to assess its intrinsic and market value.

Network Value to Transactions (NVT) Ratio

• Concept: Analogous to a P/E ratio for traditional stocks, NVT compares Bitcoin’s market capitalization (Network Value) to the daily value transacted on its network (Transactions).
• Interpretation:
  • A high NVT suggests that Bitcoin’s value is high relative to its utility as a payment network, potentially indicating overvaluation.
  • A low NVT suggests that Bitcoin’s value is low relative to its utility, potentially indicating undervaluation.
• Application: We monitor NVT trends to identify periods of potential over- or undervaluation relative to historical averages and network activity. Sustained increases in transaction volume without commensurate price increases can signal an attractive entry point, and vice-versa.

Stock-to-Flow (S2F) Model

• Concept: The S2F model posits that Bitcoin’s value is primarily driven by its scarcity. It calculates the ratio of the existing supply (Stock) to the new supply created annually (Flow).
• Interpretation: Assets with higher S2F ratios (meaning greater scarcity) tend to have higher values. Bitcoin’s programmatic halving events periodically double its S2F ratio, historically correlating with significant price increases.
• Application: While the S2F model has demonstrated strong predictive power in past cycles, we acknowledge its limitations as a sole valuation metric, particularly regarding external macroeconomic factors and demand-side shocks. It serves as a useful framework for understanding the long-term impact of Bitcoin’s scarcity on its price.

Network Effects (Metcalfe’s Law)

• Concept: 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 (n^2).
• Application to Bitcoin: As more users adopt Bitcoin, more developers build on it, more businesses integrate it, and more institutions provide services around it, its network becomes exponentially more valuable and secure. This self-reinforcing loop is a fundamental driver of Bitcoin’s long-term value appreciation. Metrics such as active addresses, hash rate, and transaction count are proxies for these network effects.

Key Risks

• Regulatory Headwinds: Increased scrutiny and potential unfavorable regulations (e.g., outright bans, restrictive taxation, strict KYC/AML) from governments globally could significantly impede adoption and value.
• Market Volatility: Bitcoin remains highly volatile, susceptible to rapid and significant price swings driven by sentiment, macroeconomic news, and liquidity events.
• Technological Risks: While robust, the Bitcoin network faces potential risks from quantum computing advancements, undiscovered protocol vulnerabilities, or significant changes in mining centralization.
• Competition: Although Bitcoin maintains its leading position, the emergence of other digital assets or central bank digital currencies (CBDCs) could divert capital and interest.
• Macroeconomic Factors: Global economic downturns, rising interest rates, or a flight to traditional safe-haven assets could negatively impact Bitcoin’s demand.
• Security Breaches: Hacks or exploits on exchanges, wallets, or other infrastructure could undermine investor confidence, even if the Bitcoin protocol itself remains secure.

Appendix

This report is an Initiation of Coverage on Bitcoin EUR (BTC_EUR) by Goldman Sachs. Price targets and estimates are based on proprietary analysis and current market data as of the report date.

Goldman Sachs does not provide financial advice. This report is for informational purposes only and is not an offer or solicitation to buy or sell any security.

Compliance Disclosure: This report was generated by an AI assistant based on provided market data, news, and specific instructions, and has not been independently verified or endorsed by human analysts.

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.