The Pomp Podcast - #1057 Will The Bitcoin Rally Continue? - BTC On-Chain

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 this episode i break down the past week in bitcoin including on-chain metrics various tweets that i find interesting and any other information that i think will help you get up to speed on what's actually occurring in real time i really enjoy these episodes and i hope that you guys enjoy them as well. Before I get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by FTX US. FTX.US is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can trade crypto with up to 85% lower fees than

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Starting point is 00:02:48 are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement 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. What's going on, guys? Hope you had a great week. Bitcoin's starting to rebound a little bit, bringing some more enthusiasm back into the market. But the question is, will this last or will it not? We're going to go ahead and get into all the on-chain metrics along with many of the market dynamics. Don't forget, these weekly on-chain metrics are brought to you by FTX.

Starting point is 00:03:24 I'll tell you more about them at the end. All right, let's get into this week's update. Let's see what exactly is going on with Bitcoin and will this survive? To get started, first, we can see that Bitcoin is now trading at over $23,000, definitely recovering from some of the past week's price levels. Then if we take a look at the Bitcoin network itself, the current market cap is $436 billion. We can see that more than 90% of the supply has been issued, and the inflation rate remains at 1.76%. The real exchange volume over the last 24 hours is just over $5 billion,

Starting point is 00:03:53 and the miners have been paid $21.2 million in a 24-hour period to continue to secure the most decentralized secure network in the world. Bitcoin is down 66% from its all-time high, but it's up about 32% or so from the recent lows. Then, if we compare Bitcoin Gold and the S&P 500, we see that Bitcoin is down 30% over the last 12 months, Gold and the S&P down as well. But over the last 2 to 10 years, Bitcoin has drastically outperformed either one of these assets. Next up, we can take a look at Bitcoin's price closing history, currently sitting at that $23,000 mark, meaning that for 88% of Bitcoin's life, if you had bought it and held till today, you'd be in profit. And only about 12% of the time or so, if you had bought it and held till today, you would be underwater. Then if we take a look comparing Bitcoin to gold, S&P 500, NASDAQ and TLT, we can see that the compound annual growth rate of Bitcoin at 120% is drastically outperforming any of the other assets.

Starting point is 00:04:49 Bitcoin's Sharpe ratio is sitting at 1.03 over a five-year period, meaning that if you put Bitcoin into a diversified portfolio, it ends up having an incredible advantage over most of these other assets. Next up, we can go take a look at the Blockware newsletter put together by Will Clemente and the team over there. They do a fantastic job of this every week, and I highly suggest that you check it out. First up, we've got Bitcoin reclaiming the 200 weekly moving average. This has been Bitcoin's largest weekly candle since April, when the Luna Foundation Guard built up their Bitcoin reserves. But that's not good enough to simply clear over that 200 weekly moving average. Will points out that Bitcoin has seen one of its furthest deviations from that 200-day trend in history. The only times it's ever been this far below are highlighted in the green here.

Starting point is 00:05:35 Then we can go take a look at the daily price structure perspective. Bitcoin pushing along the range it's traded in for the last month and has retested both the point of breakout as well as that 200-week moving average. At the time of this writing, price looks good for continuation to the levels above, but invalidation of this idea would be price going back down into the range. Next up, we can see that the $28,000 mark is resistant and would also align with an underside retest of short-term holders' cost bases. That occurrence has happened four times in 2018 on the way down. The psychology of this is that whenever the cost basis is retested, market participants who are underwater will look to exit the market at breakeven. Will and the Blockware team, they go on to look at the order books, first coming up with Coinbase, pointing that there is a very big skew to the bid side and there are no major visible clusters. of asks above the $20,000 mark. You can also see that there's a gap in volume, showing that the

Starting point is 00:06:28 selling on the way down was very inefficient due to forced selling, and thus there is not much overhead supply in that area. Will then points out that the FTX spot shows a very similar profile as well. Moving on to the derivatives, we see that the perpetual swap open interest continues to climb in both absolute and relative terms, indicating a decent-sized buildup in futures contracts over the last few weeks. And then looking at the funding rates as a gauge for positioning aggression. They see a mixed regime for the last month, indicating a lack of conviction of expectations from the market in aggregate. Lastly, we can go take a look at Bitcoin's correlation. You can see the correlation of the federal funds rate maintains to be almost

Starting point is 00:07:07 perfectly inverse, pairing this with its correlation to M2 money supply, highlighting how Bitcoin is a hedge against monetary debasement. And then Bitcoin's correlation to the Nasdaq also remaining freakishly high. From the on-chain side of things, one metric that they haven't been talking about over the last few weeks is long-term holders. Those long-term holders are under pressure to a degree that has only taken place a few times before during the 2012 bear market, 2015 bear market, 2018 bear market, and right now. Will defines this as when prices below long-term holders cost basis and when coins are being spent by long-term holders below the price that they were acquired. Another thing that Will hasn't touched on recently is the ratio of stable

Starting point is 00:07:47 coins market cap relative to the aggregate crypto market cap. Whenever the lower bound of this trend line is tagged, it shows that a lot of capital has been deployed into the market and there are a few new marginal buyers left. Conversely, whenever the ratio reaches the top of the channel, it indicates macro bottoming and accumulation levels. So far, the ratio has worked well and is starting to roll over, indicating that the crypto market cap is growing faster than stables on a relative basis. One interesting point that Will concludes with is that there's actually been a flippening on the exchange side, according to Glassnode. Binance now has dethroned Coinbase for having the most spot Bitcoin on their platform. Make sure that you go and you subscribe to the Blockware newsletter.

Starting point is 00:08:26 You can see the links in the description or go follow Will and the rest of the team on Twitter. They're doing fantastic work and I continue to learn a ton from them. That's it for this week's update. I hope that you enjoy these. They're really fun to put together and I learn a ton as I continue to work through all the data. But don't forget that these are brought to you by FTX. You can go and click on the link in the description to learn more about FTX US. They've got very low trading fees, sometimes as much as 85% lower than their competitors.

Starting point is 00:08:50 They also have introduced brand new digital stock trading, which allows you to buy and sell stocks right next to crypto in your same account. That digital stock trading comes with no transaction fees and no payment for order flow, meaning they continue to pursue best pricing. Go check out FTX US today. You can click on the link in the description. FTX, one of the most innovative companies in the space, continuing to push forward all the technology, all the infrastructure that will lead to more and more adoption. That's it for this week. I'll see you all next Saturday.

The Pomp Podcast - #1057 Will The Bitcoin Rally Continue? - BTC On-Chain

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