Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Recommendation: BUY

Rating: HIGH CONVICTION

Initiation Date: [Current Date]

1. Key Data & Forecast Snapshot

2. Investment Thesis

Bitcoin (BTC_EUR): Digital Gold in an Evolving Macro Landscape

We initiate coverage on Bitcoin (BTC_EUR) with a BUY rating and a HIGH CONVICTION due to its accelerating institutional adoption, robust network security, and fundamental scarcity in a macro environment ripe for alternative store-of-value assets. Bitcoin is transitioning from a niche speculative asset to a globally recognized digital commodity, offering a compelling long-term investment opportunity.

• Unprecedented Institutional Inflow: Recent U.S. spot Bitcoin ETF approvals have unlocked significant capital from traditional finance, validating Bitcoin as a legitimate asset class. This trend is accelerating globally, with sovereign wealth funds and corporate treasuries beginning to allocate. This is not merely retail speculation but strategic accumulation by sophisticated players.
• Irrepressible Scarcity & Halving Mechanics: Bitcoin’s supply is programmatically capped at 21 million units, with issuance halved approximately every four years. The next halving event (anticipated April 2024) will further constrict new supply, historically leading to significant price appreciation as demand outpaces reduced availability.
• Macroeconomic Hedge: In an era of increasing fiat currency debasement and geopolitical uncertainty, Bitcoin offers a decentralized, censorship-resistant hedge. Its verifiable scarcity and permissionless nature appeal as a store of value against inflation and an alternative to traditional safe-haven assets like gold.
• Dominant Network Effect: Bitcoin maintains unparalleled network security, liquidity, and global brand recognition within the digital asset ecosystem. Its first-mover advantage, combined with a dedicated developer community and expanding infrastructure (Lightning Network, institutional custody), reinforces its position as the premier digital store of value.

Our 12-month price target of €82,982.50 reflects a 25% upside from current levels, underpinned by our belief that the institutional adoption narrative is still in its early to mid-stages, with significant room for further capital allocation and price discovery.

3. Investment Positives

Rank-Ordered Drivers for Long-Term Value Creation

1. Accelerating Institutional Adoption: The approval of spot Bitcoin ETFs in major markets (e.g., U.S.) has de-risked Bitcoin for traditional financial institutions, catalyzing inflows from pension funds, endowments, and corporate treasuries. This broadens the investor base beyond early adopters, providing substantial and sustained demand pressure.
   • Source: CoinShares Research, Ainvest, CME Group insights, Q4 2024 – 2026 outlook.
2. Fixed Supply & Halving-Induced Scarcity: Bitcoin’s immutable 21 million unit cap, coupled with its quadrennial “halving” events (which reduce the supply of new Bitcoin by 50%), creates a deflationary asset class unique in its predictability. This programmed scarcity is a powerful long-term value driver.
3. Global Macroeconomic Tailwinds: Persistent inflation, declining purchasing power of fiat currencies, and increasing geopolitical fragmentation enhance Bitcoin’s appeal as a digital inflation hedge and an independent, sovereign store of value. It offers an alternative to traditional assets burdened by governmental control.
4. Robust Network Security & Decentralization: Bitcoin’s proof-of-work consensus mechanism, supported by a vast global network of miners, makes it one of the most secure computing networks in existence. Its decentralized nature mitigates single points of failure and censorship risks, enhancing its reliability as an asset.
5. Growing Infrastructure & Accessibility: The maturation of crypto exchanges, regulated custodians, payment rails (e.g., Lightning Network), and sophisticated derivatives markets has significantly improved Bitcoin’s liquidity and accessibility for both retail and institutional investors globally.

4. Competitive/Peer Analysis

Bitcoin vs. Gold & Ethereum

Bitcoin’s value proposition is often contextualized against traditional safe-haven assets and other prominent cryptocurrencies. While unique, it shares characteristics and competes for capital flows.

Bitcoin vs. Gold (Digital Gold Narrative)

• Similarities: Both are scarce, fungible, durable (digital vs. physical), and have historically served as stores of value, particularly during economic uncertainty. Both are largely immune to inflation by virtue of their limited supply.
• Bitcoin’s Advantages:
  • Portability & Divisibility: Easily transferable across borders, divisible to eight decimal places, making micro-transactions possible. Gold is cumbersome to move and difficult to divide.
  • Verifiable Scarcity: Bitcoin’s supply is programmatically auditable and transparent (21M cap). Gold’s total supply is unknown and subject to new discoveries.
  • Censorship Resistance: Transactions are permissionless and irreversible, offering greater autonomy than physical gold subject to seizure or export restrictions.
  • Lower Storage Costs: Digital storage is significantly cheaper and more secure than physical gold vaulting.
• Gold’s Advantages:
  • Longer History: Millennia of trust as a store of value.
  • Lower Volatility: Generally more stable than Bitcoin, appealing to conservative investors.
  • Physical Utility: Used in jewelry and industrial applications.
• Conclusion: Bitcoin presents a compelling “digital upgrade” to gold for the 21st century, offering superior properties for a globally connected, digital economy.

Bitcoin vs. Ethereum (BTC as SoV, ETH as World Computer)

• Bitcoin (BTC): Primacy as a decentralized, immutable store of value, akin to digital gold. Its design prioritizes security, scarcity, and decentralization over complex functionalities.
• Ethereum (ETH): Functions as a programmable blockchain, a “world computer” enabling smart contracts and decentralized applications (dApps). Its value is derived from its utility as the foundational layer for Web3, DeFi, and NFTs.
• Key Differentiators:
  • Purpose: BTC is primarily a store of value; ETH is a utility token for a decentralized computing platform.
  • Consensus: BTC uses Proof-of-Work (PoW); ETH transitioned to Proof-of-Stake (PoS), impacting energy consumption and decentralization dynamics differently.
  • Supply: BTC has a fixed maximum supply; ETH’s supply is uncapped but deflationary under EIP-1559 and PoS staking.
  • Innovation Focus: BTC’s development focuses on stability and security of the base layer; ETH’s focuses on scaling and expanding its dApp ecosystem.
• Conclusion: Bitcoin and Ethereum are complementary rather than direct competitors. Bitcoin serves as the foundational digital asset layer, while Ethereum provides the programmable infrastructure for a decentralized future. Investors often hold both for distinct reasons.

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

As Bitcoin is a decentralized digital asset without traditional operations, our estimates focus on price trajectory, network health, and adoption metrics rather than traditional financial statements.

Price Estimates (EUR)

• 12-Month Target (Year 1 End): €82,982.50
  • Assumptions: Continued strong institutional adoption post-ETF launches, pre- and post-halving demand, and sustained macro uncertainty driving demand for hard assets.
• Year 2 End Target: €99,500 – €110,000
  • Assumptions: Broader corporate treasury adoption, sovereign wealth fund allocations, and integration into more sophisticated financial products globally. Conservative growth following post-halving surge. (Estimate based on general market trends 2024/2025).
• Year 3 End Target: €120,000 – €145,000
  • Assumptions: Bitcoin establishing itself as a core component of global financial portfolios, potentially reaching 1-2% of global investable assets. Increased retail penetration via traditional finance channels. Sustained network growth and security. (Estimate based on general market trends 2025/2026).

Network & Adoption Assumptions

• Network Hash Rate: Expected to continue increasing at 15-25% CAGR over the next three years, reflecting growing miner investment and network security.
• Transaction Volume & Value: Anticipate 20-30% CAGR in on-chain transaction volume and value, driven by increased institutional settlement and retail adoption (including Lightning Network utilization).
• Circulating Supply Growth: Predictable and diminishing supply growth, reaching approximately 20.08 million BTC by Year 3 end, further accentuating scarcity.
• Wallet Addresses: Expect a 10-15% CAGR in active wallet addresses, indicating broader user adoption and network utility.
• Regulatory Clarity: Gradual improvement in regulatory frameworks across major jurisdictions, providing greater certainty for institutional participants and reducing systemic risks.

6. Valuation

Valuing Bitcoin requires a departure from traditional discounted cash flow (DCF) models, given its non-revenue-generating nature. Instead, we rely on a combination of network-centric metrics and scarcity models, alongside comparative analysis, to support our price targets.

Network Value to Transaction (NVT) Ratio

• Concept: The NVT Ratio compares Bitcoin’s market capitalization (Network Value) to its daily transaction volume (Transactions). It acts similarly to a P/E ratio for stocks, suggesting whether the network’s value is supported by its utility (transaction throughput).
  • High NVT: May suggest the network is overvalued relative to its usage.
  • Low NVT: May suggest the network is undervalued relative to its usage.
• Application: We expect the NVT ratio to normalize as institutional adoption drives up both price and on-chain settlement volumes. While current spikes may appear elevated, increased utility and integration into payment systems should provide fundamental support, preventing sustained overvaluation.

Stock-to-Flow (S2F) Model

• Concept: The S2F model, popularized by PlanB, attempts to predict Bitcoin’s price based on its scarcity, derived from the ratio of its existing supply (Stock) to the amount produced annually (Flow). Assets with high S2F are considered “hard” assets due to their low new supply relative to existing stock.

  Formula: S2F = Stock / Flow

• Application: Bitcoin’s S2F ratio dramatically increases after each halving event, historically correlating with significant price appreciation. The upcoming halving will further elevate Bitcoin’s S2F, positioning it as one of the hardest assets globally. While not a perfect predictive model, S2F provides a robust framework for understanding Bitcoin’s value proposition through the lens of scarcity.

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). While a direct application is complex, the principle holds for Bitcoin.
• Application: As more users, institutions, and infrastructure (e.g., payment processors, exchanges, Lightning Network channels) connect to and utilize the Bitcoin network, its value and utility compound. This network effect reinforces its dominance and security, attracting further adoption and solidifying its position as a global standard.

Our valuation approach acknowledges Bitcoin’s unique properties, combining quantitative indicators of network health and scarcity with qualitative assessments of adoption trends and macroeconomic drivers. This supports our long-term price targets, viewing Bitcoin as an emerging global reserve asset.

7. Key Risks

While our outlook for Bitcoin is highly positive, investors should be aware of significant risks inherent in this nascent asset class.

• Regulatory Uncertainty: Governments globally may impose restrictive regulations on cryptocurrencies, impacting their legality, accessibility, and exchangeability. Ambiguous or adverse regulatory decisions could dampen institutional interest and impede growth.
• Market Volatility: Bitcoin is known for extreme price volatility, which can lead to rapid and substantial losses. This volatility is driven by speculation, macroeconomic shifts, regulatory news, and market sentiment, making it unsuitable for all investors.
• Technological Risks: Although Bitcoin’s network is robust, potential technological vulnerabilities (e.g., discovery of flaws in cryptographic algorithms, 51% attacks, software bugs) could undermine trust and security, though these are considered low probability given the network’s resilience.
• Competition: The cryptocurrency landscape is evolving rapidly, with thousands of alternative coins (altcoins) and potential Central Bank Digital Currencies (CBDCs) emerging. While Bitcoin holds a dominant position, intense competition for mindshare and capital could pose long-term challenges.
• Macroeconomic Headwinds: A severe global economic downturn or a sustained period of risk aversion could lead to a flight from speculative assets, including Bitcoin, towards traditional safe havens or cash.
• Environmental Concerns: The energy consumption of Bitcoin’s Proof-of-Work mining continues to draw scrutiny. Increased regulatory pressure or public outcry over its environmental footprint could lead to restrictions or negative sentiment.
• Custodial Risk: While Bitcoin aims to be self-sovereign, many investors rely on third-party custodians (exchanges, wallets). These entities are subject to hacking, fraud, or operational failures, posing risks to asset security.

8. Appendix

Compliance & Disclaimer

This report is for informational purposes only and does not constitute investment advice. The views and opinions expressed are subject to change without notice. Investing in cryptocurrencies involves substantial risk of loss and is not suitable for every investor. Past performance is not indicative of future results.

All price targets, estimates, and forecasts are forward-looking statements based on current market conditions, publicly available information, and proprietary models. Actual results may differ materially from those projected due to various factors, including but not limited to market volatility, regulatory changes, technological developments, and unforeseen macroeconomic events.

This report has been generated by an AI assistant. While every effort has been made to ensure accuracy and provide relevant information, the content should be independently verified. We do not guarantee the completeness or accuracy of the data presented.

Sources

• Live Market Data: CoinGecko (as of [Current Date])
• Live Market News: Tavily Search, referencing CoinShares.com, Ainvest.com, CMEGroup.com, and YouTube (as of [Current Date]).
• General Market Knowledge & Estimates: Based on industry trends, analyst consensus, and historical data patterns as of 2024/2025.

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.

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