The Pomp Podcast - #592 Strong Hands Are Aggressively Accumulating Bitcoin 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 by clicking on the link in the description. In this conversation, we discuss a variety of different on-chain analytics, what's been going on with the price, who's buying, who's selling, and what Will thinks the on-chain metrics are telling us about the short-term to medium-term future.

Starting point is 00:00:39 I really enjoyed this conversation with Will, as I do with all of them, and I hope you enjoy this one as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Revolut. Let's go back to the basics for a second. I've partnered with Revolut, a finance app in the US and the UK that say they're the simplest way to access crypto. They're putting their money where their mouth is too.

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Starting point is 00:03:34 All right, let's get back into this episode 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. What's going on, man? Not much, Pom. Just a lot going on this week in the markets. Trying to keep up with everything.

Starting point is 00:04:17 Absolutely. I think people are really, really enjoying these kind of overviews on Chainmetrics. So let's just jump right into what we're seeing this week. It feels like, you know, price is kind of just oscillating back and forth between that like $30,000, $35,000. What are you seeing? Yeah, you know, in terms of price, it hasn't been so pretty. I think, you know, a lot of the TA guys are calling for lower prices. I think, you know, what we've been describing is still just kind of continued in terms of the accumulation that we've been describing. So that was kind of a, you know, a broader theme of what was in this week's newsletter.

Starting point is 00:04:57 But, yeah, I think, you know, price has kind of been decoupling from what the kind of fundamental, you know, investment behavior is showing. And, you know, perhaps, you know, this still is like we've been saying, it's just going to take out a little bit, take a little bit longer than we had initially expected. But I still don't see any changes in kind of the reaccumulation that we've been describing. Absolutely. And it feels like really the big, big takeaway here is people are selling, price has been going down, but strong hands, the experienced market participants, they're just gobbling up all this Bitcoin. And one of the things that you wrote about was the illiquid supply change metric. So maybe talk about, just remind everyone what that metric is and then what you're seeing in it.

Starting point is 00:05:39 Yeah. So, you know, this is a metric I think we've had in for the last two weeks. And it basically looks at the 30-day change between illiquid supply. So the way you can think of this is, you know, Willie Luke calls it the Rick Astley indicator. I kind of call it like the strong hands indicator. It's showing, you know, entities that have held Bitcoin for over 155 days would have statistically very low selling behavior. And so we're starting to see, you know, that continued trend of supply moving to those entities. On Monday, the 30-day change got up to $95,800. So, yeah, still seeing a continuation of that trend.

Starting point is 00:06:25 And then kind of like going off of that, I've been working with Willy Woo a little bit. We've been kind of in touch over the last couple weeks. But we put together something called the liquid supply ratio, which is pretty much just a variant of a liquid supply metric. And so this is just a very simple ratio of liquid supply to a liquid supply. And so what you see in this, you know, when I presented the idea to Willie and he charted it out. And so he messaged me. He's like, you know, this is really interesting. You look at the ratio and it's showing what's called a bullish divergence, which the oscillator is making higher lows while price is, of course, making lower lows lately.

Starting point is 00:07:10 But what that's showing is that strong hands are increasingly buying the dip, more so as we continue to go lower, but prices is making lower lows. But this is like the most, I would say, most clear divergence that we've had since that big correction we had in late January, early March. I mean, I'm sorry, early February. Got it. And then when you look at who the selling is coming from, if the strong experienced hands are buying up the Bitcoin, is all the selling coming from the young entities? Yep. And, you know, this has been going on for, you know, a month now. We've been talking about how, you know, all the selling is coming from shorter term market participants. Actually, taking a look this morning at this chart, which actually wasn't in the newsletter, but it's called Nupal.

Starting point is 00:07:58 but it's looking at short-term entities, and that's in a deep capitulation as of yesterday. And as well, looking at SOBR, which is something that we talked about on the short-term timeframe, that's showing capitulation as well, especially from short-term holders. I actually just put something out comparing the long short-term holders over the last month. In the last 30 days, long-term holders have added 579,940 BTC, while short-term holders have reduced their holdings by 521,983 BTC. So you have this offset now of longer-term holders outbuying the selling from the short-term holders. In the last week, these long-term holders have added 120,739 BTC, while short-term holders have reduced their holdings by just over 97,000 BTC. So you have this offset of over the last week.

Starting point is 00:08:58 Well, this is at the time of writing. It might be a little off the day after, but longer-term holders are offsetting the short-term selling by over 20,000 BTC. um and you know this is something that we've talked about before but you know either this resembles um a few things so you know after after the end of the bull market um so you know late late 2018 or late 2017 early 2018 um and then obviously after the the 2013 uh bull market as well but then it also resembles um kind of this mid consolidation um which you know took place in mid-2013, and then also kind of this divergence you had in late 2016, where you had the longer-term holders coming in and setting the floor, while some of those shorter-term

Starting point is 00:09:45 speculators freaked out and moved out of the market. So those are the other times where we've seen this divergence between the short- and long-term holders. But this has been something we've been tracking for a while now. And, you know, I think the key takeaway here is for anybody that's in this asset, you know, for the long term, when you're looking at people who have been in this market, you know, they're stepping in here and saying Bitcoin is, you know, a good deal right now. And they're stacking really heavily. Well, the shorter term market participants, you know, the speculators are starting to get freaked out and moving out, which, you know, is great long term. Perhaps this isn't very great in the very short term because you need, I think, some of

Starting point is 00:10:30 those newer speculators to come in. And that's kind of what drives the euphoric price runs we see. And so that's why we've seen this price correction and what I believe to be a broader kind of consolidation. But yeah, you see a lot of capitulation from these short holders. Yeah. And it looks like one of the most fascinating parts of your analysis this week is the new entity growth is exploding. There's tons and tons of kind of new participants coming into the market. We don't know exactly who they are or where they're coming from, but they don't appear to be whales. These are all much, much smaller. So it's almost like aggregate growth of total new users is exploding upwards, but they tend to be smaller rather than larger players at the moment.

Starting point is 00:11:20 Yeah, exactly. And so this metric is called entities net growth. It's a very technical term, I think. I would rename it net user growth. I think that would make a lot more sense for people that hadn't seen it before. But so essentially what this is, is it's looking at new entities coming on the blockchain and then subtracting those entities, that number from the amount that are the addresses that seem to be dormant, the entities that seem to be dormant.

Starting point is 00:11:50 And I'm sorry, flip that around. So that's subtracting the entities that look like they're dormant from the new entities. And then you get the net growth. Right. And so you're seeing this big W shape for anybody like looking at the news. It's literally a W, big W on the chart. But I think a lot of this, like you said, is retail, because first of all, you know, we're not seeing that uptick in new whales, which is something I believe that we're going to need to see if we have any kind of, you know, large, broader bull market continuation from here. But also when you just look at the raw holdings by, you know, by the size of the entity. So, you know, perhaps, you know, you can look at below one BTC, below five BTC, wherever you want to call that cutoff for retail. I would say, you know, anything below maybe maybe 10 BTC. I think, you know, that's below, you know, three hundred ten, ten thousand dollars. I think, you know, they consider consider that still retail investor. But, you know, all those smaller entities, particularly the very smallest ones under 1BTC and below that, they're all stacking very, very heavily.

Starting point is 00:13:03 You know, you see this chart is basically just going vertical in terms of the amount of supply that's being held by them. And meanwhile, you know, you aren't seeing this uptick in new whales. So I think a lot of this new user growth is, you know, new retail, you know, smaller holders, which, of course, is bullish for Bitcoin adoption. But, you know, that price in the short term, I think it would be interesting to see how many of these new users are coming from Latin America, because I highly suspect that a lot of the a lot of this big uptick is coming from them. Absolutely. Well, anytime that you see kind of headlines, right, in a certain geography, it's basically a marketing campaign for a future acquisition. We see this in the traditional world, even things like Robinhood, right, where there

Starting point is 00:13:47 was tons and tons of issues with their app. They shut down the service. Everyone was yelling and screaming. They actually gained users during that period, even though people were kind of yelling at them. And so it's kind of the Streisand effect. And I'm assuming that's happening here in Latin America as well. Let's move on to Sopra.

Starting point is 00:14:02 I feel like every week everyone wants to know what is going on with Sopra. So what do you see in there? Yeah, Sopra was interesting. So at the time that I wrote this, we saw this big higher low in Sopra. So I put in the letter that it was a big bullish divergence where, you know, the oscillator is making a higher low, price is making lower low. And the last time we had seen a big divergence like that was once again in late January. But actually checking it when I woke up this morning, there's a big dry on and sober yesterday and particularly, you know, breaking that down between long term and short term entities that the gist of it is coming from the short term holder. So it seemed like yesterday we had a lot of capitulation because these metrics are updated at 830 every every night, my time, Eastern time.

Starting point is 00:14:52 So it seemed like yesterday we had a lot of capitulation from the short term holders and that bullish divergence that I had to put in the newsletter is now invalidated because we no longer have that have that higher low. So it's fascinating to watch this stuff literally change, you know, in 12 hours, 24 hours so aggressively. Glassnode's got this new metric, a stable coin supply ratio oscillator. Explain a little bit about what this metric is kind of really getting at and then kind of what you're reading in the metric itself. Yeah. So, you know, this was a metric created by Willy Woo that Glassnode had just recently put in there. The way you can think of this is just like the amount of stablecoins that are kind of sitting on the sideline versus, you know, like, are they moving back into the market or not? And so you see right now we're kind of moving out of this zone that previously has kind of marked this big bottom capitulation bottom. And you're you know, you're now starting to see some of that capital rotate back into the market.

Starting point is 00:15:53 And so, you know, we've only had stable coins for, you know, the latter half of Bitcoin's existence. So the chart only goes back to late 2018. But the other times that this resembles the drawdown in the oscillator and us moving back up out of the zone that we're in, it also resembles late 2018, the big March crash we had last year. And then also that late September drawdown that we had right before the big run up at the end of last year as well. So, yeah, we're starting to see, you know, we've been talking about for a while, for a few weeks that, you know, we had a lot of stable coins that were just kind of sitting on the sidelines. Right. And we hadn't seen them necessarily move back into the market, but they were there perhaps, you know, just waiting for a better entry point. But we are, you know, as of this week, starting to see that capital in the form of stable coins start to rotate back into the market, which is a good sign of recovery. For sure. One of the charts that to me is just hitting us over the head and how obvious

Starting point is 00:16:56 there was a change in early June is this minor net position change. And I think that right around that time is when the crackdown on miners in China started. So maybe talk a little bit about what you're seeing there with miners and what they're doing. Yeah, this is interesting. So well, first of all, when you just look at the hash rate, hash rates pretty much just dropped off a cliff. We're now at the lowest point that we've been in terms of like daily average hash rate in over a year. So yeah, you can definitely see in the data that I'm looking at that, you know, a lot of that hash rate is migrating out from China and has temporarily been taken off the network. Of course, we have, you know, the difficulty adjustment coming up right around July

Starting point is 00:17:40 1st. So that'll be great when that finally occurs. But for now, yeah, we're stuck with, You know, a lot of loss of hash rate and difficulty hasn't adjusted yet. But in terms of like the raw holdings of miners, I think this is interesting because a lot of a lot of the selling has been believed to have come from miners. But what I'm seeing in at least the data that I'm looking at is not not so much because they've reduced their balance by, you know, just over 5000 bitcoins. So five thousand one hundred twenty five at the time of writing, I think it might be up by like 50 BTC or something since I wrote this two days ago. But, yeah, I mean, they are selling like right like they are reducing their holdings, but not on any magnitude that would have a significant impact on price because, you know, the market can absorb five thousand BTC with with really no problem unless it's, you know, sold in a very short period of time. But, you know, it's not anything that I think I don't think the miners themselves are responsible for this drawdown in terms of, you know, just looking at how many bitcoins have been sent out of their wallets to exchanges, presumably to be sold. So they're definitely selling, though, but just not in what I'm looking at on any extent that's going to draw the market down to 30K.

Starting point is 00:19:00 For sure. Before we let you go, you've got a new metric that you created. You've currently titled it the OTC Desk Outflow Stock RSI Signal, which is a horrible mouthful. You know that that's a horrible name. I think we got a recommendation from somebody that we should just call it the Clemente Signal. I don't know if you want to do that or not. We'll leave that up to you. But talk a little bit about this brand new kind of signal that you've created and what exactly you're trying to look for in it and what it's telling us right now. Yeah, so I think, you know, when you're in a market like this, the, you know, the money that's really pushing the market around is, you know, the big money, right? So I was thinking, you know, kind of from first principles, well, how can I track, you know, that big money? And so I was like, okay, well, big money goes through OTC desks, right?

Starting point is 00:19:52 um you know most of the most of the entities going through otc desks are like high net worth individuals institutionals those kinds of entities so i looked at you know the otc outflows um and and when you when you just look at that chart itself it's very noisy you see up down and up down up down it almost looks like you know when you're looking at like a chart of like a someone's heartbeat when it's like going crazy there's really you can't really draw any major signal lot of that um and so what i did was you know glass node is just uh added they have this tab on the top um where it says trading view and you can you can use different indicators basically um adding you know traditional ta indicators to some of these on-chain metrics which um shout out to

Starting point is 00:20:33 rafael because you know this this is pretty sick i've been playing around with this all week uh they just added this in so when you i i added a stock rsi um to this which basically looks at the strength of the metric. And so, when you plot this out, you get, you know, kind of this range that Bitcoin, you know, the metric trades in usually, but then when you have a breakout to the upside, it's a buy indicator because it's showing that there's really strong, the trend of OTC outflows is really strong. And then conversely, when it breaks out to the bottom of this range, it's been a it's been a sell indicator um and so you know that that's showing that there's not many otc outflows aka there's there's not a lot of uh you know high net worth institutional

Starting point is 00:21:20 buying going on aka you know big money so you see you know it's it's been a little over 90 accurate um aside from one missed uh buy signal but and this is just back tested over over the last year to be honest i haven't back tested it over like the previous bull market this is just over the last year um so that 90 percent number might be give or take but um yeah over the last year it's it's been very accurate um you know it's it's timed right before the the buy right before we had that run up in september um you know several buy indicators on the way on the way up and then it flashed another buy signal after the january capitulation that actually um timed the one of the tops and in march really well like almost to the tick um time the you know the dip

Starting point is 00:22:05 we had after that um another dip in in late april and then it also flashed a big uh sell signal right before we had that initial big drawdown to 30k so you know if you were using this indicator and going off of this then you know you would have been in good shape if you had if you had sold right before um you know we had that big drawdown when it flashed this sell signal so interesting it it just flashed um a buy signal which we'll see how that plays out um you know over the next few weeks. But, uh, yeah, this is, I'm trying to, I'm trying to play around with some, with some new stuff. Cause the boss and I just added this, uh,

Starting point is 00:22:38 this trading view tab where you can kind of create your own metrics. Um, so yeah, this is the first one I've come up with. Hopefully I have some new stuff for the audience over the next few weeks. That's awesome. I think you're doing a fantastic job before I let you go. Uh, where can we send people to find you on Twitter or, uh, or find out the newsletter? Yeah. So, um, I have, um, I'm going to get a URL for this. so I don't have to say this mouthful every time.

Starting point is 00:23:02 But on my Substack, it's btcbywc3.substack.com. And then, like I just said, I'm going to try to get a URL so you don't have to type in all that, and then you can just type in something quick and just get right to it. Recommended by Pomp. So, yeah, you can find me on there, on Twitter, all day long, you know, just putting out stuff, whatever I find interesting.

Starting point is 00:23:21 Or, you know, if you tweet at me, I'll, you know, engage with you, whatever, I'm just, you know, on Twitter hanging out. So feel free to reach out. DMs are open, all that. So awesome, man. Well, listen, I think the big takeaway from this week is, you know, all the short term market participants, they're selling the long term experience, strong hands, they're buying. There's tons and tons of insights in these on chain metrics. So I appreciate you spending so much time in the audience as well. In terms of breaking this stuff down, it definitely kind of provides some signal inside of all the noise and the sentiment because, you know, Twitter, Twitter was not very happy. There are a lot of people very, very bearish on Twitter over the last couple of weeks.

Starting point is 00:24:02 So keep at it, and then we'll do this again next weekend. Thanks, Fomp. Yeah, I think, you know, a lot of people are freaking out. I think maybe this is their first rodeo.

The Pomp Podcast - #592 Strong Hands Are Aggressively Accumulating Bitcoin w/ Will Clemente

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