Bitcoin Investment Memo Q4 2022

This document outlines an investment thesis for exposure to Bitcoin (BTC).

Bitcoin Investment Memo Q4 2022

Disclaimer: None of the following is investment advice. Please do your own research before making any investment.


This document outlines an investment thesis for exposure to Bitcoin (BTC). To make this assertion, we explore key strengths, risks, and valuation models to develop a long-term bull case.


Bitcoin has arguably the best inflation schedule of any chain. Bitcoin's inflation is halved every 4 years. It currently has a 1.86% inflation rate. In the year 2140, Bitcoin's inflation rate will be 0%. It has a fixed finite supply of 21 million BTC.

The top 115 Bitcoin wallets hold roughly 16% of the Bitcoin supply. In comparison, the top 100 Ethereum wallets hold roughly 10% of the Ethereum supply. And the top 100 wallets of Solana hold over 30% of its supply. A lower percentage is considered better.


Decentralization, measured by the Nakamoto Coefficient, is essential for censorship resistance. Bitcoin has a Nakamoto Coefficient of 7,349, making it the most decentralized blockchain by a large margin. It's higher than Ethereum (34), Solana (31), Avalanche (28), and Thorchain (27). Bitcoin is secured by 16,085 validators. A blockchain with 1,000 or more validators is commonly believed to be “sufficiently” decentralized.


Throughput, measured in transactions per second (TPS), is essential for keeping up with user demand. Bitcoin has a (very low) throughput of 7 TPS. To solve the scaling problem, new technologies like the lightning network and zkBTC are being researched and developed.

Should I Buy Bitcoin?

To determine if Bitcoin is currently a good investment, we’ll look at relative valuation models, on-chain bottom indicators, and technical analysis indicators:

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