The Pomp Podcast - #568 Is The Bitcoin Sell-Off Over?? w/ Will Clemente

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. Will Clemente is a finance major at East Carolina University. He has quickly become one of my favorite writers on all things Bitcoin, including deep dives on various on-chain analytics. You can subscribe to Will's new email newsletter in the link in the description. In this conversation, we discussed this week's price sell-off, on-chain metrics, who is selling, who is buying, and much, much more. I really enjoyed this conversation with Will, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors.

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Starting point is 00:03:34 If you're a retail investor, go check it out. Make sure you check out remote. And if you're an institutional investor looking to get better trading execution, go check out LMAX Digital. All right, let's get into this episode. Will, I hope you enjoy this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions

Starting point is 00:03:54 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. All right, guys. Bang, bang. I'm here with Will. We're going to break down this on-chain metrics.

Starting point is 00:04:21 How are you doing, man? I'm good, Paul. How about yourself? I'm doing all right. Let's just jump right into it. It seems like after two weeks ago when price was going absolutely crazy, felt like it was just dropping and there was no floor, now all of a sudden we get in a situation where there's a little bit of relief and Bitcoin has come back.

Starting point is 00:04:39 So maybe just give us a quick overview. What did you see in those on-chain metrics this week? yeah sure so i guess we can just kind of roll through you know give kind of a high level overview of the newsletter we put out uh this morning so you know i think some key takeaways from the you know what we put out this morning and and just kind of the general trends through the week are you know first of all there's the you know a clear rotation from short-term holders to long-term holders um which which is interesting um especially in comparison to trends in previous cycles, which we'll get into. Exchange flows have kind of reversed. Last week, we were talking about

Starting point is 00:05:18 how we had seen a lot of coins moving on to exchanges before Wednesday's dump. But I think now we're starting to see nothing crazy, but those coins, we're now seeing net outflows from exchanges, which is showing we're in somewhat of accumulation. And then also, we're seeing new entities coming onto the network, which we had been trending down and new entities coming onto the network for perhaps the last month or so. So seeing that in the last week, last two weeks is really showing that new entities are probably getting attracted by lower prices. And then the last thing is miners are not accumulating as heavy as they had been.

Starting point is 00:06:04 I think for the entire time that we've been doing this, we've consistently been talking about how miners are accumulating more and more but we've actually kind of seen a plateau in that behavior so so so for some like kind of short-term you know support resistance zones I think one big one above us is the 200-day moving average which is around like 40,000 750 41,000 and then also So $50,000, obviously, and then $53K, and then obviously $59K to $60K. And those are, I think, kind of confluence between technical supports and on-chain supports based off of volume. And then to the downside, I think, you know, $30K, obviously.

Starting point is 00:06:48 But then if we lost $30K, I don't see a lot of support between $30K and $20K. And so those are the two main zones, and I'm looking to the downside. but we're really just kind of chopping in this range got it let's talk a little bit about these accumulation addresses i think a lot of people don't actually know what those are and then what they've been doing over the last week or so so maybe just start with like what is an accumulation address yeah so accumulation addresses are addresses that have received at least two funds um i mean at least two transactions inbound so i i think glassnode does that because by by using two instead of one inbound transactions it kind of eliminates like one one-time use addresses

Starting point is 00:07:30 right um so it's people basically that are buying bitcoin moving moving more btc into the address but aren't moving any out um and so there's that but then there's also the balance of those addresses so um i think you need to look at both of those things because you know those accumulation addresses might be going up, but the balance in the accumulation addresses might be sideways or it might be down, which is showing it's more retail coming on versus if you see the balance in the addresses really having a strong leg up in confidence with the accumulation addresses going up, then I think that shows that there's some larger entities. But, you know, in the last seven days, we've seen about 7,430 new addresses in the last seven days. So, it's looking like there's some

Starting point is 00:08:22 new, you know, at least in the short to midterm, kind of people that are, you know, scooping up these coins at these levels. They aren't necessarily swing trading, but, you know, they're just kind of accumulating. Perhaps maybe they're just looking to, you know, capture a bounce up into 50Ks, but they're not selling very short term. And then, you know, over time, we'll see if some of these accumulation addresses become long term holders. But for now, yeah, they're not selling the accumulation and like the addresses all together. They've added forty seven thousand two hundred seventy new coins to their holding. So I think that that's healthy to see.

Starting point is 00:09:03 Like we were just saying, the balance go up in confluence with the addresses. Got it. And so it feels like in some way you've got, one, these accumulation addresses, lots of those now being able to be identified on chain. And then most of the coins that are being sold are between like one day old and one month old or one week old. And so this seems to be more traders that are actually anyone who is selling is more of a trader. Yeah, you're seeing a lot of selling from, you know, more than usual from coins under 24 hours. you know, these are coins that are being moved in and out. And it's really just traders moving in and out of the market. So I think seeing this spike in the younger cohort selling, I think this is kind of showing that traders aren't really confident at these price levels

Starting point is 00:09:56 in either direction, because we've really just been trading in this call at, you know, 32, 33k and, you know, 40k at the top of the range. We've just been trading in that little channel since the crash. So I think it's just showing that a lot of these guys are just kind of swing trading, buying it, buying it, you know, at the support at the bottom and then trimming at resistance. And I think, you know, I've talked to a couple of traders over the last few days. I had this guy on one of my, I do the Twitter spaces and his name's Crypto Cred, but he's really good with the TA and he was saying, yeah, I'm, you know, myself and other people

Starting point is 00:10:33 that I know that are technical traders. We're just waiting for confirmation to the upside. We're not going to, you know, try to try to they're OK with giving up some of the upside in return for being confident in their entry. So I think right right now, people are kind of hesitant to to go long or short for that matter. I think people are just waiting for the market to kind of make a decision. And then like the futures open interest is pretty flat, too. So I think that's showing people are kind of hesitant to jump back into the market after, you know, last week. Got it. And so it does seem like while the traders don't really know, should it be long or short, and they're kind of doing more of the short-term optimization, long-term holders seem to be drastically still accumulating, right? People who don't care about short-term price movement seem to be unmoved by any of this price volatility, and they're actually taking the opportunity to buy more. Yeah, and I think it's really interesting because at the same time, we have the long-term holders that have been adding to their holdings over the last seven days.

Starting point is 00:11:35 And then when you look, you know, it's almost like inversely correlated. The short term holders have been trending down. So you get this. And, you know, I don't know if this is a really good thing, because obviously you want to continually, you know, have coins move to people who aren't going to sell. But I think it would be nice to see some some new market participants come in and stay. I don't think I don't think that's a that's a great thing. Um, obviously in, in terms of, you know, building up that, that base of, of coins, um, in terms of price, but just in terms of adoption, I think it would be better to see new, you know, new entities come on.

Starting point is 00:12:16 Um, but I mean, that's not, that's not the end of the world, but I think what's interesting is, you know, when, when we get to the previous, like at the top of cycles, um, you start to see, you know, retail really overtake, um, a lot of the movement, um, in, in, you know, in and out of exchanges and volume and things like that. And they start to tick up a larger portion of supply. And at the same time, you see the longer term holders sell off. And then in the bear market, you see the opposite. All the short term speculators move out because Bitcoin went down 80 percent. And, you know, when we get to the bottom of the bear, that's that's peak when when long term holders are accumulating because they've

Starting point is 00:12:57 been through multiple cycles. So I think it's interesting right now that you're seeing, and this is one thing that if I had to look at something that looked like a top, it would be this because you're starting to see the long-term holders take up a larger portion of supply again, while short-term holders are trending down, meaning they're selling, where in previous cycles, it's almost like these lines had crossed where short-term holders really ramp up their holdings and long-term holders begin to kind of sell into the strength mid to into the later phases of the bull market. So that's something I'm keeping my eye on because that's not something that's happened in previous cycles where midway through the cycle, you've seen the short-term

Starting point is 00:13:44 speculators step out while the long-term holders are coming in and scooping up those coins. But But for, you know, this prolonged of a period of time, I just think that's interesting. What do you think the ramifications of that would be? Does that signal maybe potentially a bigger bull market, a longer bull market, maybe not a crash, you know, at some point in the future or we don't know yet? Yeah, I think it's showing that we're building this stronger base up. um obviously you know it's not great for the adoption like i said but i in terms of the coins you know uh being locked up and building up this floor i think that this is good um in in that sense so yeah i think if if this you know if this continues and and coins continually are moving to

Starting point is 00:14:34 um these these long-term holders um perhaps we're in this you know strong accumulation zone But it's just a question of if that were the case, how long are they able to hold the floor while new sellers are moving out and what's the offset between those two forces? But I think it's kind of neutral. I think if you see continued accumulation by long-term holders and this trend continues now where I'm seeing this reversal where the short-term holders are selling off and long-term holders are continuing to add, I think perhaps the structure of the underlying forces behind the cycle are perhaps different than previous ones. got it and so what else are you seeing on the on-chain metrics there's some stuff around like entity growth that you wrote about yeah so um the glass node is this metric called net entities growth and you can basically just think of it as like net user growth on the network um so glass node kind of the you know forensically uh clusters different addresses into what they believe looks like a certain entity so an entity can be a person a corporate treasury an investment fund

Starting point is 00:15:52 what just looks like one um one one group or one you know and i don't know another synonym for entity but i think that's pretty straightforward honestly but they they subtract um the new the new entities coming on the network from entities that have no balance and and they they look dormant so there's no action coming from them for a prolonged period of time um and then also they have no BTC. So they subtract that difference and then you get net entities growth. That had actually been trending down over the past month or so. But now over the last week and a half, two weeks, you've seen a new leg up in that. So overall, it still looks like it's in a downtrend, but we have seen like this really sharp, almost V-shaped recovery in the

Starting point is 00:16:44 new entities coming on the network. So, perhaps this is retail because retail, the smaller entities call it like 0.001 to 1 BTC. Those are trending up in terms of how much supply they're holding. And then also the number of whales is trending down. So, to say that the new entities are, you know, you're seeing this leg up in new entities while there's a move down in the number of new whales coming onto the network. To me, that shows that it's retail or holders with smaller amounts. Got it. And then talk a little bit in terms of the idea of selling at a loss on aggregate versus actually coming back to break even as people offload some of these Bitcoin. Yeah. So this is a metric called SOPR. It's something that we've touched on in previous

Starting point is 00:17:38 pods. It's basically the aggregate profit loss of the market on any given day. When you see the market at a loss on aggregate, it's something that's not so common in a bull market because people aren't going to be willing to sell at a loss when Bitcoin is going parabolic. But whenever we do see these dips into where the market's selling at a loss, it usually doesn't stay down there for a long period of time. And we're actually seeing a pretty sharp recovery in that where the market's now back in net profit, no longer in net loss. So I think that that's kind of showing this rebound in whoever was going to kind of capitulate because what we had last Wednesday was really a capitulation and then a liquidation. So I think whoever is going to

Starting point is 00:18:30 capitulate it it appears that they've already done so got it and then what about uh kind of miners what were they doing this week yeah so you know for a while we have been talking about how the miners were stacking really hard and they just kept adding to their positions over the last you know month and a half um but what what i've seen on chain in the last call it you know 10 days or so is, is, you know, this, this plateau in, in, uh, miners accumulating. Um, so Glassnode looks at, you know, all the, the minor balances, they have a metric called minor unspent supply. And so, you know, right around May 10th, um, it kind of topped out. And since then we've just kind of been going sideways, um, which is, I guess, I guess, market neutral because, um, you know,

Starting point is 00:19:17 they're not, they're not accumulating as heavily as they had been, but they're not dumping necessarily either but you know i have seen a lot of selling coming from chinese miners which is interesting because um i heard some talks about you know the ccp uh cracking down on on different uh mining pools um and then also something about the the wet season and they have to move their um you know their their machines to you know a different location um i might be misquoted on that. But it definitely is showing a lot of selling coming from these Chinese miners, particularly one is Pulin, which I looked up was the second largest Chinese pool for miners. So I think that's interesting. I definitely contribute a little bit to some of the selling

Starting point is 00:20:06 last Wednesday. There's a big spike in coins moved to exchanges from Pulin. But I'm seeing this this trend in um selling from from chinese miners over the last week got it and then what about uh the actual bitcoin on the exchanges it seems like that was a little bearish last week but uh may have uh have flipped this week yeah um you know i think for the entire cycle there had been this this narrative kind of driving uh you know at least from the data side that you know the coins are being moved off the exchanges and then they're moving into deep cold storage never to resurface again um but it you know over the last month or so we've we've really started to see these coins come back on exchanges in a big way um and especially leading up to last wednesday

Starting point is 00:20:56 we saw a lot of coins moving on to exchanges um which was kind of this early sign that perhaps we were getting ready for this dump especially in the hours leading up to uh you know call it tuesday wednesday um but you know after when after wednesday we're starting to see that kind reverse so um i think we kind of touched this at the beginning but you know they're not necessarily super bullish like we're not seeing these massive amounts of coins coming off exchanges but they're no longer um net inflows to exchanges so it is showing that people are are taking coins off at at a bigger rate than than the people are moving coins onto exchanges so i think you know that is showing some accumulation, but it doesn't look like there's any crazy capitulation coming

Starting point is 00:21:43 in the short term just based off of that, because it seems like people are now accumulating again slowly. Got it. And so would it be fair to say that kind of in summary, two weeks ago, things were a little bit more uncertain than they are now. Definitely, there was a lot more selling, some capitulation. This week, it seems like while we're not completely out of the woods, Things are more positive, looking like there's been some relief or recovery. And ultimately, the bull market is still intact and it's got a lot more room to run. Yeah, I think we're in this interesting zone here where, you know, the short term price action is definitely could go either way. But, yeah, I think it's starting to show some promising signs, especially after Wednesday.

Starting point is 00:22:30 We're definitely seeing at least this kind of relief bounce here. um but i still remain bullish for the longer term cycle i think um you know this is just kind of a this big consolidation um and this this big shake out that i still see is going higher based off of kind of the the broader metrics but uh yeah i think you know i in the short term i remain kind of uh optimistic but skeptical i guess you could say where um it's starting to look like things are turning around but um you know it's not screaming like this thing is about to you know explode so uh i i think in the short term it's just kind of a market where you just kind of sit back and and watch and let the market tell you more absolutely and then uh before i let you go

Starting point is 00:23:18 tell us a little bit about how the email is going you uh you recently launched and it seems like it's growing pretty quickly um but uh just remind everyone about that uh that email that you send out a couple of times a week. Yeah, man. So, um, you know, every Friday I send out the newsletter on pump sub stack, but then on Monday and then sometimes on Wednesdays, um, if needed, I send out a newsletter on my sub stack, which is a BTC by W C three dot sub stack.com. Um, I think we're now up to almost 16,000 subscribers, um, which has been super awesome. You guys have been super supportive. I appreciate it. Um, but if anybody's not subbed to the newsletter, go ahead and do that. I really appreciate it. Awesome. Well, listen, I'm enjoying this. I'm learning a ton.

Starting point is 00:24:00 Uh, I think a lot of people are really enjoying these videos. Uh, so thank you so much for doing this and, uh, just keep us updated on what's going on on chain and, uh, we'll do it again next Saturday. Thanks a lot, Bob. Take it easy, man.

The Pomp Podcast - #568 Is The Bitcoin Sell-Off Over?? w/ Will Clemente

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