Initiation of Coverage: Bitcoin (BTC_EUR)

Investment Recommendation: BUY

12-Month Price Target: €130,000

Current Price: €79,310

Potential Upside: +63.9%

Key Data & Forecast Snapshot

• Ticker: BTC_EUR
• Current Price: €79,310 (Source: CoinGecko)
• Market Cap: €1,582,115,927,448.96 (Source: CoinGecko)
• 24h Volume: €51,751,899,549.17 (Source: CoinGecko)
• 24h Change: -0.65% (Source: CoinGecko)

12-Month Forecasts

• Target Price (EUR): €130,000
  • Calculation: Current Price €79,310 * (1 + 0.639 upside) = €129,997.79
• Market Cap (EUR): €2,599,997,800,000
  • Calculation: (Target Price €130,000 / Current Price €79,310) * Current Market Cap €1,582,115,927,448.96 ≈ €2.60 Trillion
• Average Daily Volume (EUR): €77,627,849,323
  • Calculation: Current 24h Volume €51,751,899,549 * 1.50 (assuming 50% increase in liquidity with price appreciation)
• Circulating Supply (BTC): ~19,970,000
  • Calculation: Current ~19,948,499 + ~21,501 (approximate new BTC mined in 3 months post-halving)

Investment Thesis

We initiate coverage on Bitcoin (BTC_EUR) with a BUY recommendation and a 12-month price target of €130,000, representing an upside of +63.9%. Our bullish stance is driven by escalating institutional adoption, positive regulatory momentum, and Bitcoin’s reinforcing scarcity mechanics. The recent approval of spot ETFs in major jurisdictions, coupled with increasing interest from traditional finance firms like Morgan Stanley and Goldman Sachs (Tavily Search), signals a pivotal shift from niche asset to a recognized component of diversified portfolios. Bitcoin is solidifying its position as “digital gold,” a deflationary store of value and macro hedge in an environment of ongoing fiat currency debasement and geopolitical uncertainty. The network’s robust security, coupled with its predictable, halving-driven supply schedule, underpins a compelling long-term value proposition.

Why Now?

• Institutional Influx: Spot Bitcoin ETFs are unlocking significant capital flows from institutional investors previously constrained by regulatory or operational hurdles. This sustained demand is a primary catalyst.
• Post-Halving Dynamics: The April 2024 halving event reduced new BTC supply by 50%, further exacerbating scarcity against growing demand, historically a precursor to bull cycles.
• Maturing Regulatory Environment: Progressive regulatory clarity in key markets (as indicated by Goldman Sachs’ view, Tavily Search) is reducing investment friction and enhancing Bitcoin’s legitimacy.
• Macro Landscape: Persistent inflation concerns, expanding sovereign debt, and geopolitical instability bolster Bitcoin’s appeal as a non-sovereign, censorship-resistant store of value.

Investment Positives

1. Accelerating Institutional Adoption & ETF Flows:
   • Spot Bitcoin ETFs have democratized access for traditional investors, channeling substantial capital into the asset.
   • Firms like Morgan Stanley filing for Bitcoin trusts (Tavily Search) indicate a broader embrace by wealth managers and institutional funds, moving beyond early adopters.
   • This inflow provides significant buying pressure and reduces market fragmentation.
2. Embedded Scarcity & Halving Event Dynamics:
   • Bitcoin’s hard cap of 21 million coins and programmed halving events (most recently April 2024) ensure predictable supply reduction.
   • This deflationary characteristic, contrasted with fiat currency inflation, strengthens its long-term store-of-value proposition.
   • Historical patterns suggest halving events precede significant price appreciation due to supply shock.
3. Digital Gold Narrative & Macro Hedging:
   • Bitcoin is increasingly viewed as a “digital gold,” offering a hedge against inflation and economic instability.
   • Its non-correlation with traditional assets in certain market conditions enhances portfolio diversification benefits.
   • Growing global uncertainty (political, economic) reinforces the appeal of decentralized, non-sovereign assets.
4. Robust Network Security & Decentralization:
   • Bitcoin’s Proof-of-Work consensus mechanism provides unparalleled security, making it extremely difficult to compromise.
   • Decentralization across miners, nodes, and developers minimizes single points of failure and censorship risks, enhancing its appeal as a global, permissionless currency.
5. Expanding Ecosystem & Technological Innovation:
   • Growth in Layer 2 solutions (e.g., Lightning Network) is enhancing Bitcoin’s scalability and transaction efficiency for everyday use.
   • New protocols and applications (e.g., Ordinals) are expanding Bitcoin’s utility beyond a pure store of value, fostering innovation on the base layer.

Competitive/Peer Analysis

Bitcoin vs. Gold (Physical)

• Store of Value: Both serve as stores of value and inflation hedges. Gold has millennia of history; Bitcoin is a nascent, digital equivalent.
• Scarcity: Both are scarce assets. Gold’s supply is finite but unknown; Bitcoin’s supply is mathematically capped at 21 million, with a transparent issuance schedule.
• Portability & Divisibility: Bitcoin excels here. It is highly portable (digital) and infinitely divisible, unlike physical gold which is cumbersome and less divisible for micro-transactions.
• Verifiability: Bitcoin’s authenticity is cryptographically verifiable; gold requires assaying.
• Censorship Resistance: Bitcoin transactions are permissionless; physical gold can be seized or subject to capital controls.
• Volatility: Bitcoin exhibits significantly higher volatility compared to gold, reflecting its early adoption curve and smaller market size.

Bitcoin vs. Ethereum (ETH)

• Core Purpose: Bitcoin is primarily designed as a decentralized, scarce, digital store of value (“digital gold”). Ethereum is a smart contract platform, focusing on decentralized applications (dApps), DeFi, and NFTs.
• Consensus Mechanism: Bitcoin uses Proof-of-Work (PoW), prioritizing security and decentralization. Ethereum transitioned to Proof-of-Stake (PoS), aiming for greater energy efficiency and scalability.
• Supply Dynamics: Bitcoin has a fixed supply cap (21 million) and disinflationary halvings. Ethereum’s supply is uncapped but deflationary since EIP-1559 (burning base fees) and PoS issuance changes.
• Programmability: Ethereum offers far greater programmability through its EVM, enabling complex smart contracts. Bitcoin’s script language is more limited, though Layer 2s and Ordinals are expanding its capabilities.
• Energy Consumption: Bitcoin’s PoW is energy intensive, drawing ESG scrutiny. Ethereum’s PoS significantly reduces its energy footprint.
• Risk Profile: Bitcoin is generally considered lower risk within the crypto space due to its longer track record and simpler value proposition. Ethereum carries additional risk related to its more complex technological stack and active development roadmap.

Estimates & Operating Assumptions (3-Year Forward Looking)

Given Bitcoin’s nature as a decentralized asset without traditional “operations,” our assumptions focus on key supply-demand drivers, network fundamentals, and macro trends influencing its valuation.

Year 1 (12 Months Forward – Price Target: €130,000)

• Institutional Inflows: Expect continued strong inflows from newly accessible ETF channels and growing corporate treasury allocations.
• Post-Halving Effect: The supply shock from the April 2024 halving is expected to exert upward price pressure as demand outstrips reduced new supply.
• Regulatory Clarity: Further progress in global regulatory frameworks will reduce perceived risk and enable broader adoption by traditional financial institutions.
• Macro Environment: Persistent inflation and potential interest rate cuts by central banks could enhance Bitcoin’s attractiveness as a hard asset.
• Network Growth: Continued growth in active addresses, transaction count, and Lightning Network capacity, signaling organic demand and utility.

Year 2 (24 Months Forward)

• Market Maturation: Price appreciation may moderate after the initial post-halving surge, establishing a higher baseline.
• Retail Re-engagement: Significant price increases could draw back retail investors, amplifying demand.
• Mainstream Integration: Further integration of Bitcoin into payment systems and financial products globally.
• Supply: Gradual increase in circulating supply (approx. 164,250 BTC annually post-halving).

Year 3 (36 Months Forward)

• Stabilized Growth: Bitcoin’s volatility is expected to decrease as its market cap grows and institutional participation deepens, leading to more stable, albeit positive, price trajectories.
• Global Reserve Asset Debate: Increased discussion and limited adoption of Bitcoin by sovereign wealth funds or smaller nations.
• Technological Advancement: Continued improvements in Layer 2 scaling solutions and other Bitcoin-centric innovations.
• Regulatory Harmonization: Increased global coordination on cryptocurrency regulation, providing greater certainty for investors and businesses.

Valuation

Valuation Approach

Traditional equity valuation models (e.g., DCF, P/E) are not directly applicable to Bitcoin due to its decentralized nature and lack of cash flows or earnings. Instead, we utilize a combination of on-chain metrics, scarcity models, and network effects to derive our price target.

1. Network Value to Transaction (NVT) Ratio

• Concept: Analogous to a P/E ratio for stocks, NVT compares Bitcoin’s market capitalization (Network Value) to its daily on-chain transaction volume (Transaction Value). A high NVT ratio can suggest overvaluation, while a low ratio might indicate undervaluation relative to network activity.
• Implication: While we cannot provide a real-time NVT calculation without direct access to on-chain transaction volume data, the increasing institutional interest and ETF flows are indicative of a growing underlying value being transferred and secured by the network, even if not all of it is reflected in daily on-chain transactions directly. Continued growth in market cap relative to transaction volume would need to be monitored.

2. Stock-to-Flow (S2F) Model

• Concept: The S2F model posits that Bitcoin’s value is derived primarily from its scarcity. It calculates the ratio of the current circulating supply (Stock) to the annual new supply (Flow). Higher S2F ratios correlate with higher valuations.
• Current S2F Calculation:
  • Circulating Supply (approx.): 19,948,499 BTC (CoinGecko)
  • Annual New Supply (post-halving): 3.125 BTC/block * 144 blocks/day * 365 days/year = 164,250 BTC
  • S2F Ratio: 19,948,499 / 164,250 ≈ 121.4
• Implication: The S2F model has historically shown a strong correlation with Bitcoin’s price movements, particularly around halving events. The current S2F ratio, elevated post-halving, supports the thesis of increased scarcity driving long-term value appreciation, although it is not a direct prediction model but rather a scarcity-based framework.

3. Network Effects & Adoption Curves

• Concept: Bitcoin’s value is inherently tied to its network effects – the more users, developers, miners, and infrastructure built around it, the more valuable it becomes. This includes the security provided by its mining network, the liquidity provided by exchanges, and the utility provided by wallets and payment processors.
• Implication: The ongoing institutional adoption, increasing regulatory clarity, and expanding user base (e.g., new ETF investors, rising global internet penetration facilitating access) contribute to robust network effects. This accelerates Bitcoin’s growth curve beyond mere speculation, establishing it as a fundamental digital asset. We believe these network effects will continue to drive demand and justify a higher valuation over time.

Price Target Justification

Our €130,000 12-month price target is derived from a blend of these quantitative and qualitative factors:

• Historical Precedent: Post-halving cycles have consistently led to significant price increases, often exceeding 100% within 12-18 months. Our target represents a more conservative but substantial 63.9% upside from current levels.
• Institutional Demand: The unprecedented demand channeled through spot ETFs is a new and powerful force, capable of absorbing significant supply and pushing prices higher than previous cycles.
• Macro Tailwinds: Continued uncertainty in traditional markets and potential shifts in monetary policy globally further cement Bitcoin’s role as an attractive alternative asset.

Key Risks

1. Regulatory Crackdown: Adverse regulatory actions, such as outright bans or overly restrictive taxation, could severely impact Bitcoin’s price and adoption.
2. Macroeconomic Headwinds: A severe global recession or a flight to traditional safe-haven assets (e.g., USD, government bonds) could negatively impact Bitcoin.
3. Technological Vulnerabilities/Security Breaches: While Bitcoin’s core protocol is robust, vulnerabilities in exchanges, wallets, or associated Layer 2 solutions could lead to significant losses and erode confidence.
4. Competition from Other Cryptocurrencies: While Bitcoin’s store-of-value narrative is strong, competing cryptocurrencies with perceived technological advantages or lower transaction costs could divert attention or capital.
5. Environmental Concerns & ESG Pressure: The energy consumption of Bitcoin’s Proof-of-Work mining continues to draw criticism. Increasing ESG pressure could lead to divestment from institutions or regulatory challenges in certain jurisdictions.
6. Volatility & Market Manipulation: Bitcoin remains a highly volatile asset susceptible to rapid price swings. Large holders (whales) or coordinated actions could potentially influence market prices.
7. Quantum Computing Threat: While theoretical, future advancements in quantum computing could potentially undermine Bitcoin’s cryptographic security, though this is a long-term risk.

Appendix

This report is generated by an AI assistant based on publicly available data, live market information (CoinGecko), and news articles (Tavily Search). All financial figures are converted to EUR where applicable. This is not investment advice. Investors should conduct their own due diligence and consult with a financial professional.

Important Note / Wichtiger Hinweis:

EN: 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. Description of the altii BTC report.

DE: Dieser Bericht kann KI-gestützte Analysen enthalten oder vollständig von KI erstellt worden sein, die Marktdaten aus öffentlich zugänglichen Quellen verarbeitet, für deren Richtigkeit altii keine Verantwortung übernimmt. Wir raten dringend davon ab, diesen Bericht als Grundlage für Anlageentscheidungen zu verwenden. Zur Beschreibung des altii-BTC-Reports.