Initiation of Coverage: Bitcoin EUR (BTC_EUR)

1. Key Data & Forecast Snapshot

Bitcoin EUR (BTC_EUR)

• Current Price: €57216
• Market Cap: €1,144,602,421,491 (Approx. €1.14 Trillion)
• 24h Volume: €37,749,090,451
• 24h Change: -1.12%

12-Month Forecasts

• Target Price (12m): €90,000
• Target Market Cap (12m): €1,800,000,000,000 (Approx. €1.80 Trillion)
• Target 24h Volume (12m): €47,186,363,063

2. Investment Thesis

We initiate coverage on Bitcoin EUR (BTC_EUR) with a bullish outlook, driven by escalating institutional adoption, its unparalleled digital scarcity, and strengthening network effects. Bitcoin is evolving from a speculative asset into a globally recognized store of value and a strategic allocation for institutional portfolios.

Why Now?

• Institutional Influx: Recent Bitcoin ETF inflows have reached a three-week high, signaling a renewed institutional appetite (Source: Yahoo Finance). Major financial institutions like Citi are actively building infrastructure to integrate Bitcoin into existing financial systems and forecasting significant institutional adoption by 2026 (Source: ainvest.com, bloomingbit.io). This integration provides increased liquidity, accessibility, and legitimacy.
• Halving Event Impact: The recent Bitcoin halving event further constrains new supply, reinforcing its programmed scarcity. Historically, halvings have preceded significant price appreciation cycles. While some impact is priced in, the supply shock combined with demand-side catalysts remains a powerful driver.
• Macro Hedging Potential: In an environment of persistent inflation concerns and geopolitical uncertainty, Bitcoin offers a compelling non-sovereign hedge against traditional fiat depreciation. It increasingly competes with gold as a “digital gold” asset class.
• Growing Network Utility: Beyond its store of value proposition, Bitcoin’s layer-2 solutions (e.g., Lightning Network) continue to enhance its utility for faster and cheaper transactions, broadening its use cases.

3. Investment Positives

1. Unmatched Scarcity & Fixed Supply: Bitcoin’s hard-capped supply of 21 million units ensures absolute scarcity, differentiating it from fiat currencies and even traditional commodities where supply can be influenced by mining costs or political factors. This programmatic scarcity is a core tenet of its value proposition.
2. Accelerating Institutional Adoption: The approval of spot Bitcoin ETFs in major markets has unlocked significant institutional capital. News reports consistently highlight increasing institutional engagement and integration into traditional finance (Source: Yahoo Finance, ainvest.com, bloomingbit.io). This trend is in its early stages and poised for substantial growth.
3. Decentralization & Security: Bitcoin’s decentralized nature makes it resistant to censorship, single points of failure, and governmental interference. Its proof-of-work consensus mechanism provides robust security, making it the most secure and battle-tested blockchain network.
4. Global Accessibility & Liquidity: As a borderless digital asset, Bitcoin offers unparalleled accessibility to anyone with an internet connection. Its deep global liquidity across numerous exchanges facilitates efficient trading and price discovery.
5. Deflationary Monetary Policy: Unlike fiat currencies subject to inflationary pressures from central bank policies, Bitcoin’s supply issuance schedule is predictable and deflationary, with block rewards halving approximately every four years. This makes it an attractive asset during periods of increasing monetary supply.

4. Competitive/Peer Analysis

Bitcoin vs. Gold

• Store of Value: Both are widely regarded as stores of value, particularly during economic uncertainty. Bitcoin (BTC) offers “digital gold” properties:
  • Portability: BTC is easily transferable across borders digitally, unlike physical gold.
  • Divisibility: BTC is divisible into 100 million satoshis, making it suitable for micro-transactions. Gold’s divisibility is practical only to a certain extent.
  • Verifiability: BTC’s authenticity is cryptographically verifiable; physical gold requires assays.
  • Scarcity: BTC has a fixed, known supply (21 million). Gold’s supply, while limited, is subject to new discoveries and mining efforts.
• Inflation Hedge: Both have historically performed as inflation hedges. Bitcoin’s programmatic scarcity positions it as a strong contender in the digital age.
• Volatility: Bitcoin exhibits significantly higher volatility than gold, reflecting its nascent market and earlier stage of adoption.

Bitcoin vs. Ethereum (ETH)

• Primary Purpose:
  • Bitcoin: Primarily designed as a decentralized digital currency and store of value. It prioritizes security, decentralization, and scarcity.
  • Ethereum: A smart contract platform enabling decentralized applications (dApps), NFTs, and a vast DeFi ecosystem. It prioritizes programmability and utility.
• Consensus Mechanism:
  • Bitcoin: Proof-of-Work (PoW).
  • Ethereum: Transitioned to Proof-of-Stake (PoS) with “The Merge,” aiming for greater energy efficiency and scalability.
• Monetary Policy:
  • Bitcoin: Fixed supply cap (21 million) and halving schedule, making it deflationary.
  • Ethereum: No fixed supply cap, but has a burning mechanism (EIP-1559) and issuance rate adjusted by governance, aiming for disinflationary or potentially deflationary supply.
• Investment Role: Investors typically view Bitcoin as a long-term store of value and macro hedge. Ethereum is often viewed as an investment in the broader Web3 and decentralized finance ecosystem.

5. Estimates & Operating Assumptions

Our forward estimates for Bitcoin reflect sustained institutional adoption, continued network growth, and the inherent scarcity driving its value. We assume a gradual deceleration in price growth CAGR as market capitalization matures but expect significant absolute gains.

Key Estimates (EUR, end of period)

• 2025e Price: €90,000
• 2026e Price: €112,500
• 2027e Price: €132,188

• 2025e Market Cap: €1.80 Trillion
• 2026e Market Cap: €2.25 Trillion
• 2027e Market Cap: €2.64 Trillion

Operating Assumptions

• Institutional AUM Allocation: We project increasing allocation of global institutional Assets Under Management (AUM) into Bitcoin.
  • 2025e: Incremental 0.5% of AUM allocation to Bitcoin.
  • 2026e: Incremental 0.75% of AUM allocation to Bitcoin.
  • 2027e: Incremental 1.0% of AUM allocation to Bitcoin.

  Rationale: Based on current ETF inflows and financial institutions’ strategic moves towards integration (Source: ainvest.com, bloomingbit.io).

• Active Addresses Growth (YoY): Represents unique active participants on the network.
  • 2025e: +10%
  • 2026e: +8%
  • 2027e: +6%

  Rationale: Continued retail and institutional user adoption, albeit at a moderating growth rate as the user base expands.

• Daily Transaction Volume Growth (YoY): Reflects the economic activity on the Bitcoin network.
  • 2025e: +20%
  • 2026e: +15%
  • 2027e: +10%

  Rationale: Increased utility, integration into payment systems, and institutional transfers driving higher transaction throughput.

• Circulating Supply: Assumed to be approximately 20,000,000 BTC for market cap calculations, accounting for new blocks mined but simplifying for the purpose of large-scale estimates.

6. Valuation

Traditional equity valuation metrics are not directly applicable to Bitcoin. Instead, we rely on network-centric metrics and supply/demand dynamics.

Network Value to Transaction (NVT) Ratio

• Concept: Similar to a P/E ratio for stocks, NVT compares Bitcoin’s market capitalization (network value) to the value of transactions processed on its blockchain.
  • Formula: NVT Ratio = Market Capitalization / On-Chain Transaction Volume (e.g., daily or weekly average).
  • Interpretation: A high NVT ratio suggests that the network value is growing faster than its utility (transaction volume), potentially indicating overvaluation. A low NVT ratio suggests undervaluation.
• Current Status: Post-ETF approval and halving, Bitcoin’s NVT ratio has seen fluctuations. While higher than bear market lows, it remains within historical norms, suggesting underlying network activity is generally supporting the current valuation amidst a period of price discovery driven by new capital inflows.

Stock-to-Flow (S2F) Model

• Concept: The S2F model values scarce assets based on their existing supply (“stock”) relative to the rate at which new supply is produced (“flow”). For Bitcoin, the “flow” is the newly mined BTC. The halving events significantly reduce the flow, increasing scarcity.
  • Formula: S2F = Stock / Flow
  • Interpretation: Higher S2F implies greater scarcity and, according to the model, higher value. Bitcoin’s S2F ratio approximately doubles with each halving event.
• Current Status: The recent halving has elevated Bitcoin’s S2F ratio, aligning it with historical patterns that have seen price increases post-halving. While criticized for not accounting for demand, the S2F model highlights Bitcoin’s programmed scarcity as a fundamental value driver.

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 (V ~ N²).
  • Application to Bitcoin: As more individuals, institutions, and applications utilize Bitcoin (e.g., active addresses, transaction count), the network’s overall utility and perceived value increase exponentially.
• Current Status: Bitcoin’s global user base continues to expand, driven by increasing awareness, accessibility (ETFs), and integration. This growing network effect is a key long-term driver of its value.

7. Key Risks

• Regulatory Risk: Evolving and potentially restrictive regulations globally could impact Bitcoin’s accessibility, utility, and market sentiment. Uncertainty regarding future government actions remains a significant overhang.
• Volatility: Bitcoin is historically a highly volatile asset. Sharp price fluctuations, both upwards and downwards, are common, driven by market sentiment, macroeconomic events, and regulatory news.
• Technological Risks: While robust, any unforeseen vulnerability in Bitcoin’s underlying cryptography or consensus mechanism could severely damage confidence. Competition from new, potentially more efficient blockchain technologies also poses a long-term risk.
• Concentration Risk: A significant portion of Bitcoin supply is held by early adopters and large institutions (“whales”), whose large-scale selling could trigger substantial price declines.
• Macroeconomic Headwinds: A severe global economic downturn, tight monetary policies, or a flight to safety towards traditional assets could temporarily dampen investor appetite for riskier assets like Bitcoin.
• Environmental Concerns: The energy consumption associated with Bitcoin’s Proof-of-Work mining continues to draw scrutiny. While progress is being made towards sustainable mining, negative perceptions could invite regulatory pressure or discourage adoption.

8. Appendix

Disclaimer

This report is an Initiation of Coverage on Bitcoin EUR (BTC_EUR). The information presented herein is based on publicly available data, live market information, and general market knowledge. It reflects our views at the time of publication and is subject to change without notice. This report is for informational purposes only and does not constitute investment advice. Investing in cryptocurrencies carries significant risks, including the potential loss of principal. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

This report was generated by an AI assistant and reflects analysis based on the provided inputs and training data. While efforts were made to ensure accuracy, no guarantee is provided regarding the completeness or reliability of the information.

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