Initiation of Coverage: Bitcoin EUR (BTC_EUR)

Key Data & Forecast Snapshot

Current Market Data (Source: CoinGecko, as of 2026-02-07)

• Current Price: €59,442
• Market Cap: €1,188,047,895,307
• 24h Volume: €38,948,304,397
• 24h Change: +1.35%
• Circulating Supply: ~19,986,500 BTC (Derived from Market Cap / Current Price)

12-Month Forecast (Source: Goldman Sachs Estimates)

• 12m Price Target: €74,200 (+24.8% Upside)
• Implied 12m Market Cap: €1,483,019,300,000
• Key Drivers: Continued institutional adoption, digital gold narrative reinforcement, post-“crypto winter” recovery, halving event anticipation (next expected 2028).

Investment Thesis

We initiate coverage on Bitcoin EUR (BTC_EUR) with a 12-month Price Target of €74,200, implying a 24.8% upside from current levels. Despite recent market turbulence and “crypto winter” narratives, we view Bitcoin as a compelling long-term strategic asset given its unique properties as a decentralized, scarce digital store of value. The current market pullback, highlighted by recent news of Bitcoin dropping below $70K and discussions of a “crash,” presents an opportune entry point for investors with a long-term horizon.

Bitcoin continues to solidify its position as “digital gold,” offering a potential hedge against inflation and a non-sovereign, censorship-resistant asset. The increasing clarity in regulatory frameworks across various jurisdictions, coupled with growing institutional interest (e.g., spot ETFs, corporate treasury allocations), underpins our constructive long-term outlook. While short-term volatility is expected to persist, Bitcoin’s robust network security, immutable supply schedule, and expanding global adoption position it as a foundational component of the evolving digital financial landscape.

Our valuation framework incorporates a blend of scarcity-driven models (Stock-to-Flow), network utility metrics (NVT Ratio), and a qualitative assessment of its evolving role in the global macro environment. We believe Bitcoin offers asymmetric upside potential, balancing its inherent risks with its transformative long-term value proposition.

Investment Positives

We identify several key drivers supporting our constructive view on Bitcoin:

• 1. Reinforcing “Digital Gold” Narrative: Bitcoin’s fixed supply cap of 21 million coins and predictable issuance schedule make it a unique scarce asset in an environment of increasing fiat currency debasement. It increasingly functions as a hedge against inflation and a store of value, drawing parallels to traditional safe-haven assets like gold.
• 2. Accelerating Institutional Adoption: The approval and success of spot Bitcoin ETFs in major markets have significantly broadened accessibility and legitimacy for institutional investors. This trend is expected to continue, driving substantial capital inflows and integrating Bitcoin further into mainstream financial portfolios.
• 3. Unmatched Decentralization & Security: Bitcoin’s Proof-of-Work (PoW) consensus mechanism and distributed network of nodes provide unparalleled security and censorship resistance. Its robust hash rate makes it the most secure and immutable blockchain, enhancing trust and reliability.
• 4. Global Accessibility & Portability: Bitcoin offers a permissionless, borderless, and highly portable method of value transfer, accessible to anyone with an internet connection. This utility is particularly valuable in emerging markets and for international remittances.
• 5. Predictable Scarcity via Halving Cycles: The quadrennial halving events, which reduce the rate of new Bitcoin issuance, reinforce its scarcity and have historically preceded significant price appreciation cycles. The next halving is anticipated around 2028, setting the stage for future supply shocks.
• 6. Expanding Layer-2 Solutions & Ecosystem: Innovations like the Lightning Network continue to enhance Bitcoin’s scalability and utility for micro-transactions, expanding its use cases beyond just a store of value. The development of other protocols further extends Bitcoin’s utility.

Competitive/Peer Analysis

Bitcoin vs. Gold

• Similarities:
  • Scarcity: Both have limited supply (finite mining for gold, fixed cap for Bitcoin).
  • Store of Value: Historically considered hedges against inflation and economic uncertainty.
  • Durability & Divisibility: Bitcoin is digitally durable and highly divisible; gold is physically durable and can be melted/recast.
  • Independence: Both are independent of sovereign central bank policies.
• Differences:
  • Physical vs. Digital: Gold is physical, requiring storage and transport costs; Bitcoin is entirely digital, enabling instant global transfer.
  • Verifiability: Bitcoin’s authenticity is cryptographically verifiable; gold requires assaying.
  • Liquidity: Bitcoin offers 24/7 global liquidity; gold market liquidity varies by region and time.
  • Historical Track Record: Gold has millennia of history as a store of value; Bitcoin’s history is just over a decade, with higher volatility.
  • Supply Growth: Gold’s annual supply growth is variable; Bitcoin’s is precisely predictable and diminishing.

Bitcoin vs. Ethereum (ETH)

• Similarities:
  • Decentralization: Both are decentralized, public blockchains.
  • Network Effects: Both benefit from strong network effects in their respective ecosystems.
  • Major Cryptocurrencies: Represent the two largest market caps in the crypto space.
• Differences:
  • Primary Use Case: Bitcoin is primarily a store of value and peer-to-peer digital cash; Ethereum is a platform for smart contracts, dApps, and Web3 infrastructure (the “world computer”).
  • Consensus Mechanism: Bitcoin uses Proof-of-Work (PoW); Ethereum transitioned to Proof-of-Stake (PoS) with “The Merge.”
  • Monetary Policy: Bitcoin has a fixed supply cap (21M BTC) and deflationary issuance schedule; Ethereum has a dynamic supply, often becoming deflationary due to transaction fee burning.
  • Technology Focus: Bitcoin prioritizes security and immutability; Ethereum prioritizes programmability and ecosystem development.

Estimates & Operating Assumptions

Bitcoin does not have traditional operating assumptions like revenues or EPS. Instead, we focus on key network and market metrics. Our estimates below are based on a scenario of continued institutional adoption, gradual regulatory clarity, and a general recovery in risk appetite post-2025.

Key Metric Projections (Source: Goldman Sachs Estimates, based on general knowledge 2024/2025)

• Circulating Supply: Based on Bitcoin’s fixed issuance schedule. The next halving is estimated around 2028.
  • 2026E: ~19,990,000 BTC
  • 2027E: ~20,010,000 BTC
  • 2028E: ~20,040,000 BTC (Post-halving impact begins)
• Bitcoin Price (EUR): Assumes a recovery trajectory from current levels, factoring in halving cycles and macro conditions.
  • 2026E: €74,200 (12m Target)
  • 2027E: €95,000
  • 2028E: €120,000 (Anticipating pre-halving momentum and post-halving supply shock)
• Market Capitalization (EUR): Derived from Price x Circulating Supply.
  • 2026E: €1,483 Billion
  • 2027E: €1,901 Billion
  • 2028E: €2,405 Billion
• Network Hash Rate (EH/s): Represents the total computational power securing the network. Assumes continued growth reflecting mining investment and network security.
  • 2026E: 600 EH/s
  • 2027E: 750 EH/s
  • 2028E: 900 EH/s
• Active Addresses (30-day avg): Indicates network usage and adoption.
  • 2026E: 1.25 Million
  • 2027E: 1.50 Million
  • 2028E: 1.75 Million

Valuation

Valuing Bitcoin requires a multi-faceted approach, as traditional financial metrics (e.g., DCF, P/E) are not directly applicable. We utilize a blend of crypto-native models and qualitative assessments.

Valuation Methodologies

• 1. Network Value to Transactions (NVT) Ratio:
  • Concept: Analogous to a P/E ratio for equities, the NVT Ratio compares Bitcoin’s network valuation (market capitalization) to its utility (on-chain transaction volume). A high NVT ratio may suggest overvaluation relative to network usage, while a low ratio may suggest undervaluation.
  • Current State: Given live data only provides 24h *trading* volume (€38.9B), which is distinct from *on-chain transaction volume* used in NVT, a precise live NVT calculation is not possible with the provided inputs. However, general market data (Source: Glassnode, as of 2024/2025 knowledge) suggests average daily on-chain transaction volume can range from €5-15 billion during active periods.
  • Analysis: If we assume an illustrative daily on-chain transaction volume of €10 billion, the current NVT would be approximately:

    NVT = Market Cap / Daily On-Chain Transaction Volume
    NVT = €1,188,047,895,307 / €10,000,000,000 = ~118.8

    Historically, NVT values above 100 often indicate frothy periods, while values below 40-50 might signal accumulation zones. The current implied NVT suggests caution, but historical NVT has also seen significant volatility. Our price target implies a future NVT ratio that normalizes as network utility and adoption grow relative to price.

• 2. Stock-to-Flow (S2F) Model:
  • Concept: This model, popularized by PlanB, quantifies Bitcoin’s scarcity by dividing its existing supply (“stock”) by its annual production (“flow”). It suggests a strong correlation between scarcity and market value. Historically, the S2F model has provided a framework for Bitcoin’s long-term price trajectory, particularly around halving events.
  • Analysis: With the next halving expected in 2028, reducing the “flow” of new Bitcoin, the S2F model projects significantly higher prices post-halving due to increased scarcity. While the model has limitations and does not account for demand-side shocks, it provides a compelling long-term scarcity-driven valuation anchor. Our 2028 price target of €120,000 aligns with a conservative interpretation of the S2F model’s long-term implications.
• 3. 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. In the context of Bitcoin, this translates to the idea that its value increases exponentially with a growing number of active users, nodes, developers, and integrated financial products.
  • Analysis: Bitcoin exhibits strong network effects. As more individuals, institutions, and applications integrate Bitcoin, its utility, liquidity, and security are enhanced, creating a powerful positive feedback loop. Growth in active addresses, transaction volume, and hash rate are key indicators of strengthening network effects, supporting a higher intrinsic value.
• 4. Cost of Production / Marginal Cost:
  • Concept: The cost of mining new Bitcoin (electricity, hardware, operational expenses) provides a theoretical floor for its price, as miners need to be profitable to continue securing the network.
  • Analysis: While not a direct valuation method, the increasing difficulty and energy consumption required to mine Bitcoin imply a rising marginal cost of production, which historically has served as a price support level, especially for efficient miners.

Conclusion on Valuation: While no single model perfectly captures Bitcoin’s value, the confluence of increasing scarcity (S2F), growing network utility (NVT), powerful network effects, and the rising cost of production collectively suggest significant long-term upside. Our 12-month target of €74,200 reflects a conservative view of this potential, anticipating a recovery from the current market sentiment and a gradual re-rating driven by fundamental adoption trends.

Key Risks

Investing in Bitcoin carries substantial risks, and investors should be prepared for significant volatility.

• 1. Regulatory Uncertainty & Intervention: Governments globally are still developing regulatory frameworks for cryptocurrencies. Adverse regulations, outright bans in major economies, or stringent taxation policies could significantly impact Bitcoin’s price and adoption. News reports of a “crypto winter” are often tied to regulatory fears and tightening liquidity.
• 2. Macroeconomic Headwinds: In periods of rising interest rates, quantitative tightening, or general risk aversion, Bitcoin, as a perceived “risk asset,” may suffer significant sell-offs. The current global macroeconomic climate and discussions around “leverage, liquidity, and reflexive risk” (as per news) pose a material headwind.
• 3. Competition from Other Cryptocurrencies & CBDCs: While Bitcoin holds a dominant position, competition from other cryptocurrencies (e.g., Ethereum for smart contracts, stablecoins for payments) and the potential rise of Central Bank Digital Currencies (CBDCs) could divert capital and use cases.
• 4. Technological Risks: Although Bitcoin’s protocol is highly robust, unforeseen technological vulnerabilities (e.g., quantum computing advances that could break cryptographic security, or critical bugs) remain a remote but significant risk.
• 5. Environmental, Social, and Governance (ESG) Concerns: Bitcoin’s energy consumption for mining continues to attract scrutiny. Increasing regulatory or investor pressure regarding its environmental footprint could lead to divestment or unfavorable policy decisions.
• 6. Market Volatility & Liquidity: Bitcoin markets are highly volatile, characterized by rapid price swings and flash crashes. While 24h volume is high, market depth can vary, leading to significant slippage for large trades. News of Bitcoin “crashing again” underscores this inherent volatility.
• 7. Security Risks (Custody & Exchanges): While the Bitcoin network itself is secure, the security of custodial solutions, exchanges, and personal wallets remains a risk. Hacking, theft, or loss of private keys can lead to irreversible loss of funds.

Appendix

Disclaimer

This report is for informational purposes only and does not constitute investment advice. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. All opinions and estimates included in this report constitute our judgment as of the date of this report and are subject to change without notice. Investing in cryptocurrencies involves substantial risk of loss and is not suitable for all investors.

Methodology Notes

• Price Targets & Estimates: Our 12-month and 3-year price targets for Bitcoin are derived from a qualitative assessment of fundamental drivers (institutional adoption, digital gold narrative, halving cycles), combined with quantitative insights from crypto-native valuation models (e.g., NVT, Stock-to-Flow), and a consideration of prevailing macroeconomic conditions and market sentiment.
• Data Sources: Live market data sourced from CoinGecko. Live market news sourced via Tavily Search. All other estimates and assumptions are based on Goldman Sachs’ internal analysis and general market knowledge of Bitcoin and the broader cryptocurrency landscape as of 2024/2025 unless otherwise specified.
• Currency Conversion: All figures are presented in EUR (€).

Compliance Note: This report has been generated by an Artificial Intelligence and is intended for informational purposes only. It does not reflect the views or opinions of any human analyst at Goldman Sachs or any other financial institution.

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