The Pomp Podcast - #580: Will Clemente on the Re-Accumulation Phase Is Almost Over

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 by clicking on the link in the description. In this conversation, we discuss strong hands accumulating, futures open interest, miners selling the reaccumulation phase and bitcoin price action i really enjoyed this conversation with will and i hope you do as well before we get into this episode though i want to

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Starting point is 00:03:25 with 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 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've got Will here. We're going to go over on-chain metrics every single Saturday. Will, what's going on, man? Not much. Just taking it easy and enjoying the hot weather. How about you, Paul?

Starting point is 00:04:07 I'm doing well, buddy. All right, let's get into it. Bitcoin seems to be just ranging still, but it looks like there's a whole bunch of stuff you've been able to take out of the on-chain metrics for this week. So where do you want to start? Yes, I guess we can just kind of start with the price action. I think we had kind of a funny week where we just kept ranging sideways. Last week, we had talked about how we were just kind of sitting in this range between $32K and $40K. And we had kind of drawn this triangle pattern, which I saw a lot of other traders on Twitter were looking at as well. And I bring this up because we finally had a breakdown out of that, which was funny because you'd expect that

Starting point is 00:04:48 would break down. But immediately you saw a reversal. So Bitcoin did the complete opposite of what everybody expected it to do. But nonetheless, we had kind of a sweep down to range lows around 31K. And then we've had kind of this sharp rebound into today where we're sitting around 37K. So price action wise, we did get a strong bounce off of those range lows. So that's a good thing. And then another non-on-chain thing, I think it's interesting to watch how Bitcoin's been reacting a little bit differently to news. I think for a while you had bad news and price would tank good news it wouldn't really do anything now you have you know good news is is uh seemingly pushing price up and bad news isn't doing as much damage so i think just kind of from

Starting point is 00:05:39 like a fundamental analysis standpoint like that that's something that i've noticed that has changed over the last week um but you know overall i think what what what you know i was really trying to get at in the newsletter this week is that we're kind of in this reaccumulation process We had talked about, you know, we're kind of consolidating and it's going to take a while. After we had that original dump, it was going to take a while for, you know, that loose supply to kind of find a new home. But I think this week you're starting to see some of that supply move into accumulation. And so we can kind of get into the different metrics, but that's kind of like the high level of it. Got it. Let's start with SOPR.

Starting point is 00:06:20 Maybe remind us what SOPR is and then what you saw this week there. Yeah, SOPR is something that we've touched on almost every week. I feel like it's pretty much the net profit of the coins that are trading on any given day. When you have the ratio is over one, that means that the coins are trading at profit. Under one means that they're trading at a loss. And so for anybody looking at the newsletter, and I think we'll have the charts in this video, You can see we had this big drawdown in SOPR, and it was the largest drawdown since March of last year, which off the bat is good because you have this big reset of profit taking. But then we have another drawdown with, I think it was like two days ago.

Starting point is 00:07:05 And so that's showing that what it looks like to be a double bottom and kind of a higher low, which is something good to look for. and then also you have a higher low in the in the oscillator while you have a lower low in price so um like a lot of technical analysts will will recognize this is this is a bullish divergence so you have you know higher higher low in the in the in the oscillator and then a lower low in price and a bearish divergence would be you know higher high in price um lower low in the oscillator but so we have that we're back over the one threshold and then um and then also just making making that higher low double bottom um soper looks pretty good i would like to see it stabilize above one though and then possibly if we had a big drawdown to see one kind of serve as uh as support um

Starting point is 00:07:55 throughout the bull market one usually serves other than major corrections usually serves as that um that that bounce threshold because um you know in a raging bull market people aren't going to really want to sell at a loss so you really need a big swing and momentum um like what we've seen over the last few weeks to get people to start to sell at a loss. But throughout the bull market and most of the corrections we had had, Soper had bounced off one. So to see us kind of consolidate above one, and then if we had a big downswing for that threshold to that one threshold to serve as support, that'd be really bullish in my eyes. But so far, Soper looks pretty good. Got it. And then there's this really interesting relationship between short-term

Starting point is 00:08:38 holders and long-term holders that you've identified? Maybe explain that a little bit. Yeah. So this has been another trend that we've been keeping an eye on. But for a while, we had been saying that the short-term holders were outselling the long-term holders. So if you look at like a month's change, short-term holders have moved 422,000 roughly BTC out of their holdings, while long-term holders have added 389,000. So you get this net difference of shorter-term holders selling $32,000, like if you do the net between the two, right? But over the last seven days, that's kind of reversed. So over the last seven days, long-term holders have accumulated a little over $31,000 more BTC than short-term holders.

Starting point is 00:09:25 So I think that's a good sign. You're seeing the short-term holders, the ones that were going to sell at a loss have now sold at a loss. And you're also seeing this offset of longer-term holders now buying at a higher rate of the shorter-term holders that either are getting exhausted or they're running out of supply to sell. But that's showing, to me, consolidation because you have these contrary forces where the short-term holders had been selling really hard, But now the longer term holders have kind of edged them out. And you're now seeing that that net positive between the two in favor of the long term holders. So that's something that that shows me that perhaps that this reaccumulation process is towards the like the later stages. A few weeks ago, I would have I would have said maybe it's going to be a month or two.

Starting point is 00:10:19 But the long term holders are really aggressively adding to their positions here. And, you know, especially over the last week, week and a half, two weeks, they've really been outpacing that at the short term. So perhaps that means that we won't have as long of an accumulation as I had originally kind of thought. Yeah, I think my main takeaway from a lot of your analysis is definitely that the reaccumulation phase is getting close to being over before we move up again. One of the other things you identified was this illiquid supply change. Maybe describe that a little bit and kind of what you're seeing. Yeah, so Glassnode has this metric and it basically looks at different addresses and then clusters them into entities and then looks at the selling behavior of that entity. So first of all, they have to hit a certain age threshold, which is 155 days, which is, by the way, for anyone who's wondering, the same threshold for the long and short term holders.

Starting point is 00:11:16 so over over 155 days and then they have to have a very low i forget what the what the percentage is but statistically like very low um selling behavior and then they're determined illiquid liquid is like you know coins that are being moved in and out all day long so throughout the bull market one of the you know kind of one of the big narratives i guess you could say was a um the coins moving off off exchanges and then b um from like an on-chain between like the on-chain community i guess um this a liquid supply thing where rick um willie was calling it the rick astley chart because uh these holders look like they were never going to let us down but they did let us down in uh late late may to early june but uh that that now seems to be reversing back

Starting point is 00:12:06 into what looks like accumulation. So that's something to keep an eye on. And once again, that's in the newsletter. But seeing that flip back green, in my opinion, would be really bullish because you're starting to see the supply becoming liquid, that weaning off, and more coins are moving into strong hands. But for now, I mean, we're not out of the woods. It's not like screaming bullish or anything, but it's something to –

Starting point is 00:12:33 if it continues this trend, it's a good sign. Absolutely. What about futures open interest or short positions on the various exchanges? Yeah, so futures open interest had pretty much been flat since we had had that big drop on that, you know, Wednesday down to 30K. But over, you know, it was funny when we broke, and maybe this was just timing, but when we broke that triangle, which was, I think, the pattern a lot of people were looking at, to be honest, we had kind of the spike in open interest and then when it when it snapped back up i think what had happened was um a lot of people had loaded up on the bottom of that range when we broke out to the to the downside and people

Starting point is 00:13:16 loaded on shorts um because people were like oh this thing broke out everybody's everybody's looking at the same pattern so we're going to go way lower and so what happened was we had this this drop and then just kind of uh rapid you know nasty wick back up and then we headed we headed back in the other direction. And it was almost like Bitcoin has this tendency to go in the direction that's going to liquidate the most people. And that's definitely what happened here because everybody, it seems like, took that one side of the trade. You saw funding drop off a cliff. And then all of a sudden, you had this big reversal. But right now, one interesting thing, just on that same note, is there's been a big spike in shorts throughout the week

Starting point is 00:14:02 coming from Bitfinex which I the only other time that I've seen anything like this like recently was the day before we had that big drop on that Wednesday so there's a big increase on on the seventh and like midway through the ninth so either I don't you know obviously there's no way to know this could just be someone hedging but if if this is you know perhaps someone in disbelief we could be setting up for a short squeeze, but that's just something to keep in mind. Either somebody knows something or they're getting ready to get wrecked. Yeah, it could be both. Who knows? What are the miners doing? Yeah, the miners is an interesting one because, you know, for a while we had been talking about,

Starting point is 00:14:48 oh, miners are stacking, miners are stacking. But what we've actually seen over the last week, um actually the day after we dropped the last episode uh miners miners started selling um and especially from china so you know glass node they can they can't recognize every miner but they can kind of like look at look at the main ones it looks like um some of the transfers to exchanges have come from from the chinese miners specifically um and then obviously just a big spike in what they call other it's basically like all these entities they know are miners but they can't label them so there's a big spike in that who knows what what percentage of that were chinese but just in the in the main ones that glass node is is able to track um it a lot of that selling

Starting point is 00:15:30 does look like it's coming from china especially from one uh one uh pool called pooling which is the second largest i'm not super familiar with mining uh but i looked it up and it's in pooling it's the second largest uh pool in china so you know it's not it's not like they're dumping all their supply. And it's something like that would have some crazy effect on price. You know, I'm talking like 5000 BTC, nothing, nothing crazy that that's going to significantly move the price. But it is interesting to just watch, you know, we have all that stuff. China's coming out saying they're banning mining. And it does look like, you know, we've had this drop off in hash rate, But also some selling or perhaps just, you know, maybe these miners are just relocating and they need to, you know, they need some capital to move over or maybe they just want to, you know, move around their holdings while they change locations.

Starting point is 00:16:27 Who knows? But I do see that interesting movement of coins out of the miners' wallets while we've had all this, you know, this China flood about China, Spain, Bitcoin, etc. Yeah, there's some political and kind of regulatory things that are going on that could be causing things that would be abnormal on the on-chain metrics, mainly be just because they have to move, they have to get access to cash. So it makes a ton of sense. The last metric that I want to look at or kind of last analysis is plan B's stock to flow. I think this infamous analysis at this point, there's a lot of people who think it's accurate. There's a lot of people who don't think it's accurate. Where do we stand? Is it still valid or has it been invalidated? yeah um shout out to plan b really good dude um his model is is something that i i kind of think is um directionally correct it's something where you can you can look at to kind of gauge the broader cycle um i wouldn't i wouldn't appreciate trade the stock to flow price um and use that as some kind of like short term um it seems like he was he was posting that some traders are actually using the stock-to-flow multiple to trade off of. But I see it as more kind of a broader cycle, something that you look at to gauge that. But that's just my opinion. We are currently having

Starting point is 00:17:43 the second largest, or actually, I'm sorry, to the downside, the largest deflection in the history of the model. So it's something to keep an eye on. I saw he posted something. We're sitting on like the very lower bound he has the main the main um stock to flow you know the model price and then he has these two bands around that and we're sitting him right on that lower band so it's it's crunch time for for s2f and we'll see over the next couple weeks but this bounce is looking a little promising for plan b so basically if it goes lower there's a potential that it gets invalidated but it looks like just based on some of the recent uh kind of more bullish activity uh if the price recovers then we'll still be intact there bounce right

Starting point is 00:18:27 off the bottom as you would expect it to uh and kind of still bull market ready to roll yeah yeah um i think that that's what plane b is definitely hoping for i think that's what we're all hoping for too but uh we'll see what happens over the next few weeks absolutely and so it seems like uh this week the big theme is just that the reaccumulation phase uh is nearing an end right which means uh you know there was a ton of volatility there was fear there was greed all this stuff that played out uh but we've been going sideways for a little bit and people have been reaccumulating strong hands have been buying more and more uh and at some point here that's going to end in the short term uh with likely but you

Starting point is 00:19:07 can't promise but likely a move upwards is that fair to kind of categorize the analysis yeah i i think so and and um only thing i would say is that about the volatility i think the volatility like as we as we trend through the channel has been trending down but once once we break out of that of the of the whatever consolidation pattern you want to call it um whether it's just like a horizontal range that we're in um once we finally get a strong move i think that volatility comes back because the futures comes back um and this is something i I should have for us next week, but I'm trying to put a ratio of the futures open interest to the market cap to kind of gauge when the futures open interest has a stronger effect on, you know, on price. And then therefore, it would be more important to look at things like funding rates, et cetera.

Starting point is 00:19:54 But, yeah, I think I think if you if you have a strong move and that's what we kind of saw today in that tick up and not today, yesterday and that tick up in futures open interest. I think it's showing like when we have a strong move, you're going to see traders come back in. But while we're in the range, people are, people are still waiting. But, but other than that, yeah, I completely agree. Awesome, man. Well, listen, thank you so much for, for taking the time to do this. If anyone has not yet subscribed to Will's email,

Starting point is 00:20:24 where can they go do that, Will? Yeah, sure. So we're doing these episodes every week. And then I have a newsletter. It's btcbywc3.substack.com. And it's free. All you have to do is just type in your email and hit subscribe. You're growing a big audience over there pretty quickly. I think you may be onto something here. So keep up the great work. And everyone here on YouTube, you'll see us again on next Saturday. Appreciate it, Pop. Take it easy. All right, everybody.

The Pomp Podcast - #580: Will Clemente on the Re-Accumulation Phase Is Almost Over

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