The Pomp Podcast - #684: Are We Watching A Repeat of the 2020 Bull Run?

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 the lead insights analyst at Blockware. He has quickly become one of my favorite writers on all things Bitcoin, including deep dives and various on-chain analytics. In this conversation, we discuss the Bitcoin fundamentals, the on-chain metrics, what happened this past week, and what the on-chain data is telling us to be prepared for moving forward. I really hope that you enjoyed this conversation with Will, as I always do. Before we get into this episode, though, I want to quickly talk about our sponsors.

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Starting point is 00:03:30 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.

Starting point is 00:03:58 All right, man, what's going on? Not too much. How are you guys doing? We're doing awesome. Thank you for hanging in there with us. We got it figured out. Let us just get a four. Just hold the four up to start the fourth quarter.

Starting point is 00:04:09 I know. all right we're gonna move through this jeff lewis is coming on in a few minutes but there's no way we're doing this show without will the wizard on friday uh telling us what's going on on chain metrics john already brought it up sopra first chart what's going on here yeah last week you know we we're looking at this bounce um when you look at this little blue circle a shaded circle that i that i put in there that's what where we were at last week and so we were looking for do we start to get continuation to the upside in the ratio. And we have, in fact, as you see on the right-hand side of the chart.

Starting point is 00:04:45 So this kind of resembles, if you look back to like September of last year, we had this 20-plus percent correction. And then we came back down, retested that one threshold, and then started moving up from there. So we want to see that ideally, but, you know, at a minimum, you want to see that one threshold, you know, hold, obviously, and maybe stabilize above one. But yeah, I mean, ideally we continue higher.

Starting point is 00:05:12 What you don't want to see obviously is for us to go below and then retest it and it becomes resistance. But for now, looking really good. Awesome. Exchange supply shock ratio, maybe not as bullish as it's been, but still not bearish either is my read.

Starting point is 00:05:29 Yeah, so we have three different things here. The one that's slightly bearish is the highly liquid ratio so this is looking at the movement of uh coins from the highly liquid entities uh to liquid entities so the the ratio ticking down which means coins are moving to the highly liquid entities i think you're starting to get some of this reflecting in price um i'm actually kind of short term i wouldn't say like short-term bearish but i'm a little cautious over the next two days i think we probably come down and like recess like 53k um partially because of this also exchange flows are just flat over the last two weeks they're down like 490 btc which

Starting point is 00:06:07 um of course like isn't bearish to say it's just not you know strongly bullish so it's just neutral um and then like when you look at the derivatives uh funding um so you look at the perpetual swap funding we've had a really big spike over the last like 24 hours and so to me you know what that shows is like um traders are basically trying to trying to leverage long the dip and then oftentimes like when you see funding go in the opposite direction of price it usually resolves in the direction of price so like one example would be when we came off that failed breakdown of 30k um i remember uh we did it we did one of these and i was saying that we were set up for favorable conditions for a short squeeze and the reason was it was the same kind of setup but

Starting point is 00:06:55 the opposite. So you had funding going more negative as price was going up in open interest relative to market cap was going up. So in other words, you had people piling on shorts as price was going the opposite direction. And that resolves, of course, we had this massive, I remember at the time it was a huge move to like mid or upper 40Ks off those lows. So I don't think we're going to have a move of that magnitude, but I'm just saying it's, When you start to see, that's just a good example, when you start to see funding go in the opposite direction of price, especially as open interest is increasing as a proportion to market cap, you're susceptible to these moves that oftentimes resolve in the direction of price. So I think you have some some light shorts that hopped in. And over the last 24 hours, I mean, you look at like some of the APRs on funding, like I'll pull it up right here. You know, we're looking at like, on some exchanges up to 67% APR, like on Bybit, for example, which oftentimes Bybit's wrong, while at the same time, FTX is much lower at like 20%. And Deribit's at 38%. So overall, funding has seen a big spike over the last 24 hours.

Starting point is 00:08:12 So I don't know. I'm kind of short-term cautious. Obviously, long-term picture hasn't changed at all. But just for hodlers, who cares, right? But I'm just saying, just be wary. If we start to trend down over the next couple of days, come back down and retest that 53K area. And even as low as that retesting the break above the point of breakdown from May at 50K, I don't think that's out of the cards, but I think like that 53K is probably a logical area.

Starting point is 00:08:39 That's also like the trillion dollar market cap area too. So I just think there's a couple of different things in Confluence that kind of point to that being a nice little area to maybe scoop up some BTC over the next couple of days. But yeah. Let's skip ahead to the supply shock ratios. I saw you tweet this out earlier this week. And this chart to me seems like one of the most important charts right now in all of Bitcoin, where you've got kind of the historical supply shock and you've outlined it in this like green bar. Talk to me a little bit about like what this chart is really highlighting. And then once we kind of go through it the way that we have, what does that mean for kind of future price movements?

Starting point is 00:09:17 Sure. So what you see is heading into the bull market and the long term guys begin to sell into strength, heading into, I should say, into strength. And then heading into weakness, the long-term guys begin to accumulate heavily. So conversely, the short-term guys increasingly hold a larger portion of supply into strength, and then they move out of the market into weakness. The speculators all leave. And so what you see here is we're comparing the long-term holder supply to short-term holder supply to get the long-term holder supply shock ratio. And what you see is just this is illustrating the concept that when long-term holders lock

Starting point is 00:09:52 up a certain portion of supply, then you get the supply squeeze effect on the market. Long-term holders basically set the floor in a macro sense. And so we've actually reached an all-time high in this metric. So if you look at the little circled area in the top right, you see we're at all-time highs. And so what this is showing is just these long-term guys are locking up a large portion of supply and you're starting to get that effect on the market, that supply squeeze effect on the market. One other thing I find interesting about this though, is like, as we've talked about many times, we use a five month threshold for this. So 155 day threshold for this. When you go back five months ago, well, where were we? Well, five months ago is May 8th,

Starting point is 00:10:35 and so that was 11 days before we had this initial barge drawdown to 30K. So to me, that's pretty interesting, right? Because you're seeing that these people are now aging into long-term holders that held the whole way down. And so to me, that's pretty remarkable. It's showing that perhaps, you know, these market participants have a longer term time horizon. Got it. And then let's go and look at the Bitcoin miners themselves. You've got two different charts. One is just the miners, then one is the miner net position change. Let's start with the miners chart. What is this showing us? And then kind of what is your view in terms of what it's really telling us? yeah so the first chart with the three different colors um orange that's hash rate and then uh the

Starting point is 00:11:20 blue line is difficulty and then the green line is minor balances so what you're seeing is that hash continues to come back online uh you know pretty aggressively and it's come back online so aggressively that we've had six positive uh difficulty adjustments in a row uh which i don't even know the last time that that's happened um it's just you know it's just another way of kind showing the same thing. And then also miners have started accumulating a bit after selling into that rally off of the 30K lows. They did sell a bit, but now they're slowly buying somewhere. Nothing is substantial, but they are now back in a positive trend of accumulation. And that's reflected in that miner net position change metric. This is just looking at the 30-day change

Starting point is 00:12:02 of miner balances. So you can see we just started creeping back into that green area. i mean that that's the second chart up with the uh you know highlighted with that little blue circle so um yeah that's what's going on with miners also like at the bottom you'll see the hash ribbon this is another really interesting metric um this is like probably one of the best macro buy signals you could say um in bitcoin um when you pair this with um when you pair this with like moving averages for price it's been it's it's never been wrong actually um and so what you're trying to capture here is like the, you're looking for these minor capitulation events and then where hash rate starts coming back online. And so from first principles, you're just basically

Starting point is 00:12:46 saying like, for example, in 2018, you had this large minor capitulation. Once miners are done puking out their coins, then you can start moving higher. And so we've, we've got this hash ribbon buy signal about a month ago, a month and a half ago. So that, that means that the 30 day, the 30 day moving average of hash rate is crossing the 60 day moving average of hash rate while at the same time the 10 day moving average of price is crossing the 20 day moving average price and so yeah like when you when you look at this um when you go when you go from white to light red that means that the 30 day is crossing the 60 day moving average when you go from light red to red you're going from um you're going below and then when you go from light red to red you're crossing

Starting point is 00:13:31 above the 60 day and then the red to white is when the when the 30 day crosses the 60 day to the upside and also you have the the 10 day crossing the 20 day so we zoom out what's your take middle of the bull market still super bullish over kind of the medium term kind of next 90 days or so uh or has your thoughts changed no yeah um yeah still still stand on my thesis over the next couple months um like i said i think perhaps we get a bit of a pullback because some of the things We talked about funding spiking, exchange flows are neutral, and they had been strongly bullish over the last month or so. So seeing like kind of a cooling off there, some coins becoming highly liquid. And then lastly, we're actually seeing a bit of selling from whales or profit taking from whales, which I don't think is a complete red flag.

Starting point is 00:14:19 You know, you're going to see these active managers, you know, taking profits along the way. Like the, you know, when you zoom out, if you want to pull that chart up for the audience, I think it's like the third or fourth chart. You'll see like the barter trend is still that they've been in accumulation and they trimmed a bit too as well in early August. So it's not anything that it's like a red flag, like bull market's over. But I just think perhaps we're going to have a bit of a drawdown to maybe like 53K. But I don't know, man, like the market hasn't been giving anybody dips. So we'll see what happens. But for those reasons, I would just say, like, I'm short term cautious, not necessarily like short term perish, but long term, you know, that outlook hasn't changed. So my my last question for you is one of the metrics that I'm going to use to know that things are getting crazy is when your friends start asking you about Bitcoin that normally wouldn't.

Starting point is 00:15:10 Are you still got a lot of friends who they have no clue what you do? They're not asking anything. Or has that started to happen yet with the price going up a little bit? no not at all um not not more than usual uh like some of my buddies tend to be a bit more uh you know nerdy like me because then you know we like geek out about stuff about like bitcoin or whatever but um so i don't know i when i when i see people in general um like people like uh that i haven't seen in a while like everyone's always like you know oh i see you're doing stuff with bitcoin like what's up with that but um i haven't seen any like i haven't got any like tax like oh is it a good time to buy bitcoin or anything like that um i think like this stuff too is reflected in like google search trends um i think the block has some good like retail related

Starting point is 00:15:58 data um so you look at google search trends also like coinbase app downloads is another way to look at it um also you can look at the large twitter accounts um the large youtube accounts like some of these things um but the google search trends is primarily i think that and the coinbase app downloads are probably two of the better metrics for that and those are both still way down and then also you look at like you can separate volume into you say okay you know what size transactions are dominating excuse me are dominating volumes on each given day and so what you see is over the last month and a half really large transactions have completely dominated volume like we're talking like 10 million dollar plus transactions have gotten up to like 80 percent

Starting point is 00:16:41 of all the volume within each other day over the last month and a half so that's just another way to look at right now the the institutional capital i think the smarter money you could say i think is is um more so in the market and i don't think we've we've seen uh retail come in full force yet awesome all right we got a whole bunch of shit we still got to go through on the show will you're a legend will the wizard please if you haven't already go follow him on twitter where you cross over 300 000 followers now on his way to a million uh oh no will pass me Congratulations, Will, on all your success so far. Beast.

Starting point is 00:17:17 Appreciate you, guys. Congrats. That's the real flipping. Congrats, man. That's awesome. Awesome, buddy. Appreciate you guys. All right.

Starting point is 00:17:26 We'll talk soon. All right. Thanks so much. All right. See you guys.

The Pomp Podcast - #684: Are We Watching A Repeat of the 2020 Bull Run?

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