The Pomp Podcast - #1020 When Will Bitcoin Miner Capitulation End? - BTC On-Chain Analytics

Starting point is 00:00:00 what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off in today's episode will clemente couldn't join me for our weekly sit down so instead i just break down all of the charts that he put together i hope that you enjoy this and please bear with me as obviously i'm nowhere near as astute in these metrics as will but i'm doing my best to keep up so before we get into this episode, though, I want to quickly talk about our sponsors. Today's episode is sponsored by Abra. They're based in California and they're backed by top VC firms. Abra is an all-in-one, simple, secure app that allows you to trade over 110 cryptocurrencies, get 0% interest

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Starting point is 00:03:19 to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. This week was another wild one in the Bitcoin market. We continue to see the price fall and there's lots of uncertainty, doubt, and fear. The Bitcoin critics seem to be taking a victory lap.

Starting point is 00:03:38 They think they're dancing on graves. And the big question, is Bitcoin over or will it come back as it has every time before? As we can see here, Bitcoin currently trading just over $21,000 up about 1.3% over the last 24 hours. Then you can see that the market cap has dramatically dropped down only around $400 billion or so. Now remember, Bitcoin's inflation rate still sitting at 1.76% and over 90% of the 21 million Bitcoin have been issued already. You can see real exchange volumes coming in at $4.1 billion.

Starting point is 00:04:10 The mining reward, miners being paid just under $20 million every 24 hours to continue to secure the most decentralized secure computing network in the world. GBTC, the discount all the way down to 34% to NAV now, which is a major issue in the industry. And of course, Bitcoin down just under 70% from its all-time high. If we then take a look comparing Bitcoin, gold, and the S&P 500, you can see that Bitcoin's down 35% from just one year ago. But if you zoom out to only any other timeframe, from two years to 10 years, Bitcoin continues to absolutely dominate all of the other assets. Then we can go look at

Starting point is 00:04:49 Bitcoin prices closing history and sitting at $21,348. Bitcoin's traded higher for 539 days. if you had bought bitcoin and held it for 89 of its life until today you'd be in the money but about 11 of the time you wouldn't be last but not least we can compare bitcoin gold s&p 500 nasdaq and tlt you can see that the compound annual growth rate of bitcoin 124 still dominating all the other assets and then lastly the sharp ratio five-year basis sitting just around one and that is much, much more attractive than the other assets. Next, we can take a look at this data point, which was provided by Sven Henrik, where he said, only one more rate hike and we're at or exceeding the historic Fed capitulation trend as the ever-increasing debt construct brings about a

Starting point is 00:05:38 recession and the Fed has to intervene by cutting rates. You can see that red line there, just down only. If the Fed continues to hike interest rates, things may start to break. That then leads to thinking about what the future market expectations are. And what we can see is for December 2023, the Fed funds rate has fallen by 60 basis points over the last nine days, according to Dylan Leclerc. Then if we start to take a look at the Bitcoin market, what we can see is that hash ribbons, which ultimately will visualize the miner collapse as the price of Bitcoin goes down, miners who can't keep a very low cost of operations, they eventually give up. They could shut off their operations, and they actually start to sell the coins that they

Starting point is 00:06:21 previously mined. Bottoms in the Bitcoin market and these bear markets normally coincide with minor capitulation. The weak miners are bankrupted, adding to sell pressure in a cascade. Then the ribbon recovers, and that's where you ultimately will see those green circles in this chart from Willy Woo equaling the bottom. It looks like there is deleveraging right now, as he stated, but we are not quite there to the bottom yet. Then lastly, we can go and we can check out Checkmate, which says all three Bitcoin MVRV cohort ratios are underwater. The aggregate market underwater on a cost basis standpoint, long-term holders are underwater, and short-term holders are underwater as well. It's exactly what you would expect to see near a market bottom.

Starting point is 00:07:07 And then of course, David Puel pointing out that the MVRV crosses between long-term holders and short-term holders. Well, we're there, getting close again. And what this means is that the short-term holder cost bases is actually below the long-term holder cost bases. What that usually signals is that the short-term holders, they're in trouble.

Starting point is 00:07:27 Eventually they give up and usually they just walk away. Now, of course, all of these metrics, they're great data points and you should pay attention to each one of them, but they ultimately can't be relied on unilaterally. You have to look at the summary of all of the data. You've got to put it all together. And you've got to say to yourself,

Starting point is 00:07:44 I am only playing a probability game. If I think that I'm a day trader, which 95% of you are not and shouldn't try to be, do I actually want to try to time the bottom? Or do I simply want to understand if the structural elements of Bitcoin are actually still intact? And if I can look at the fundamentals,

Starting point is 00:08:04 the underlying metrics that aren't involving price, and I see that Bitcoin is still healthy, it's still decentralized, it's still executing the code as it was designed, and it's still providing the same value and utility to end users, but the price has simply decoupled from those fundamentals, then usually in past bear markets,

Starting point is 00:08:25 simply dollar cost averaging has served really well for those people. Now, history isn't necessarily a guide in terms of telling us what's gonna happen in the future, but it does serve as a great way to understand how it's played out in the past. Now, this is financial advice, but if you do your own research

Starting point is 00:08:40 and you take a look at all the data, something tells me that a lot of you guys will see what I'm seeing, which is that the underlying fundamentals appear to be very healthy. And it looks like that price decoupling from fundamentals could just simply be presenting an opportunity to the market.

Starting point is 00:08:56 Hope you guys enjoy these updates and I'll see you guys next weekend. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry,

Starting point is 00:09:11 we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to palmscryptocourse.com to learn more and I'll meet you guys for the next episode.

Starting point is 00:09:32 Thank you.

The Pomp Podcast - #1020 When Will Bitcoin Miner Capitulation End? - BTC On-Chain Analytics

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