The Pomp Podcast - #706 Major Bitcoin Buying Is Going On Right Now w/ Will Clemente

Episode Date: October 30, 2021

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 on various onchain analytics. In this conversation, we discuss the bitcoin fundamentals, on-chain metrics, what happened in the past week, and what the on-chain data is telling us to be prepared for moving forward. ======================= If you haven’t started building your crypto portfolio on Okcoin, there’s no better time. They’re one of the fastest growing global exchanges around and they have some promotions happening right now to help even more people be part of the future of finance. If you have an account already, you can split $100 in BTC with a friend when you invite them to sign up for Okcoin if they buy $100 of crypto in the first month. The more friends who sign up and buy, the more BTC you get. And I always recommend dollar-cost averaging as a way for investors to have more control over their average price when building their portfolio. Now you can automate dollar-cost averaging with completely fee-free daily, weekly, or monthly recurring buys on Okcoin until November 1. That’s no fees at all on your purchases until the holidays. Get started on the web or on their new super easy-to-use app at okcoin.com/pomp  ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days. ======================= AppSumo is the leading digital marketplace for entrepreneurs, and a great way to get your product in front of 1M+ entrepreneurs, founders, and small businesses. AppSumo is giving away their entire $1 million Black Friday marketing budget to creators. If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 offers to go live will receive $1,000, the next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go to AppSumo.com/pomp to list your product today and cash in on this amazing deal.

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 on 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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and everyone who lists gets entered to be one of the 10 lucky winners of $10,000. Go to AppSumo.com slash Pomp to list your product today and cash in on this amazing deal. Again, AppSumo.com slash Pomp, or you can click on the link in the description as well. AppSumo.com slash Pomp. Next up is Gemini. They're a regulated cryptocurrency exchange wallet and custodian. Some might say they're actually an industry-leading regulated cryptocurrency exchange wallet and custodian that makes it simple and secure to buy, sell, store, and earn Bitcoin, Ether, and over 40 other cryptocurrencies.

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Let's go. Last but not least is OKCoin If you haven't started to build your crypto portfolio on OKCoin There's no better time They're one of the fastest growing global exchanges around And they have some promotions happening right now To help even more people start being a part of the future of finance If you have an account already

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are completely free of fees, whether you're doing it daily, weekly, or monthly until november 1st that's no fees at all on your purchases until the holidays get started on the web or on their super easy to use app at okcoin.com slash pomp again okcoin.com slash pomp all right let's get this episode with will i hope you guys 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. Let's start with the newsletter in terms of the future's perpetual funding rate. You're going to have to explain to people what exactly this is and then kind of what this is telling you in terms of what we're seeing from price standpoint. Yeah. So this is a trading light, which is one of my favorite platforms. And just so people know what's going on price action in the last 10 minutes, it's showing you, is the price, the active market price moving more towards the bid or the ask? So it's basically showing you, are buyers or sellers more aggressive in the market? And so that in combination with the volume is basically showing you there's an

aggressive buyer on Coinbase right now. So that's just what's going on in the immediate term. And so that's, what's driving kind of this quick price increase is that there's some major buyer on Coinbase scooping up Bitcoin. Yeah. Well, yeah, we call it TWAPing where they're basically, you know, like averaging in, um, you know, a large buy, right. You can't just fat thumb a large buy, um, which by the way, I mean, speaking of fat thumbing that price action yesterday was pretty funny where we had someone basically just like market selling this really fat or liquidated like 46 million or $47 million of longs. And then we just continued right up. It's a complete scam price action. It's been some weird PA over the last two days.

Yesterday, like I said, we had that big seller and now it looks like we have some aggressive buying on Coinbase. But yeah, for listeners, Trading Light is awesome. You can go in and look at per exchange, basically like this heat map of all the bids and asks and then overlay some of these other indicators. But anyway, we can get into the newsletter. I just wanted to share what's going on at the second. I love that. Okay. Let's start with the futures perpetual funding rate. What exactly is this? And what's it telling us? Right. So the funding rate is based on the Delta between the spot price and in the mark price, which is different on each exchange. So you're looking at the weighted

average of all the spot exchanges versus what the actual perpetual swap contract price is trading on. And so this, what you're looking at is the aggregated version of this, but what you want to look for with funding is not necessarily the fact, I think there's this misconception that when you have positive funding, that it's always bearish. And that's not the case because it can just be the price of doing business at the time, right? If the market's trending bullish, then that's just the cost of doing business in a bullish market. And, you know, contrarily, you know, if you're in a bearish market, that's just kind of the cost of doing business. Or if you have a large liquidation cascade that can drive the PERP contract lower than spot, and you can have

negative funding. Where I think funding is really a good tool is when you have these dislocations between the trend of it and price. And so a really good example of this was right after we broke all-time highs, that really big little cluster that you see on the left-hand side, that's funding mooning up to like 150% APR on some exchanges, which is obviously a bit concerning in itself, But where you really would be concerned was in that second kind of spike on the right hand side of that first cluster. And the reason is because price is grinding down while funding is rising. And so essentially what that's saying is the force that the perpetual swap traders are exerting. So they're leverage longing as price is going down.

So they're basically getting faded by what the spot market is doing. And that's a huge red flag. And so if you remember a long time ago, like at the end of summer, we called this big short squeeze off of the lows, and it was the complete opposite setup. Price was rising, funding was going the opposite. And so using these dislocations can give some good signal about what happens in the market. And over the last couple of days, on Wednesday, I think it was Wednesday night, you had another dislocation where price was grinding down, funding was rising, and that was a big red

flag. You also had open interest spiking and particularly in particular, the coin margin contracts. So we look at we talked about this last week, the coin margin versus the stable coin margin and why, you know, why there's more convexity to the to the coin margin. Because, you know, as price goes down, you're not only your P&L is decreasing, but you're less collateralized. So that's another another thing to look at is the coin margin open interest. You can also look at liquidation levels. So I'd like to look at high block is a really good platform for that. You can see where the liquidations are.

So you can say, okay, if price goes down to, you know, X level, then, you know, you're going to have a large cascade. And so whales can see this information too, right? And so that's why, you know, you have things like what happened yesterday, where it basically looked like someone was kind of stop loss hunting in the sense of they were trying to trigger a cascade, you know, perhaps buy in cheaper, or they went short and then triggered the cascade, right? And so looking at some of these things can kind of give you some insight into, you know, when traders are kind of getting off sides and when they're in, you know, when they're leveraged doing so, you know, that that was a that was like a pretty, you know, red flag to me on Wednesday.

But, you know, we flushed a bit of that leverage out. So we have another chart here that's got your tweets overlaid on it, which like to me is I know you're getting better at this stuff and you're constantly learning because now you're starting to time some of this and really understand how the underlying fundamentals and the on-chain metrics are interfacing with price. And on this graphic, what we have is we've got three tweets of yours. The first one says that the market cap OI is rising plus positive funding. Then basically you say, hey, price is grinding down and funding is rising. FYI, kind of giving a little bit of a warning. And then you've got that by bit funding at a very high level. So maybe walk us through here, you know, how accurate is this stuff? And like, how do you think about what you're calling out versus some of the price action that we're seeing in more of like the short term versus the longer term

on-chain stuff that I think most people assign value to on on-chain. Yeah, totally. In the short term, there's just so much liquidity in the derivatives market, especially the perpetual swap market, that price is really driven by it in the shorter term. In the longer term, I look at on-chain as kind of the macro, right? And so when you're trying to look at what's going to happen over the next couple of days, on-chain really isn't the best. we're getting some nice little price action here. On-chain isn't necessarily the best tool for what's going to happen in the extremely short term. And so, for that, like I said, you look at the derivatives data. And so, I just threw over, not to necessarily show myself, but just

to show how the concept, like remove me from it, just look at the concept itself and how it's played out. So, on the left, you're looking at open interest as a percentage of market cap rising. Meanwhile, you had funding increasing as price was decreasing. Same setup after all-time highs. And then once again, the same setup on the right-hand side. But on the right-hand side, another thing to throw in, I forgot to mention a second ago, was you can also look at funding a bit more granularly. you can look at the individual exchanges. So you can look at like, you know, what's, what's Bybit funding doing, you know, what, what's finance, finance funding. And then you can go to step further and say, well, you know, what's Bybit coin margin funding, what's Bybit USD margin funding. And so on the right, what you'll see is I was comparing Bybit and Binance, which tend to have a lot more retail action compared to FTX and Darabit, which this is a

bit of a generalization, but it tends to be a bit more of the smarter money participates on those exchanges. And so when you see dislocations between like Bybit, Binance and Darabit and FTX, that can be a little, a bit of a signal as well. That was ironically also another signal when we called that short squeeze at the end of the summer, same thing in reverse. It was that you had FTX and Darabit had really high funding, but Bybit and Binance actually had really low funding. So it's the complete opposite setup where you had Bybit and Binance actually shorting while FTX and Deribit, they were longing. So it's opposite setup here. But it's just another, you can get a bit more granular in terms of how you're analyzing where the positioning is in the derivatives market.

So when we look at the futures open interest, you obviously have what I would consider the more regulated or traditional places like CME versus obviously Bybit, Binance and the like. there's way less leverage in the legacy system than there is on some of these crypto exchanges. We've got this chart that shows just an explosion of open interest. What do you read into this? Yeah, I mean, this is mostly due to the Bitcoin futures ETF, the pro shares ETF, and just the demand for the futures contracts from CME. And so the reason I threw this in is, A, now CME is the largest futures exchange, which was previously Binance, but actually got surpassed by CME this week. And that's important to understand because when you're looking at, you know, usually we like to look at in the Bitcoin market, high open interest is almost always a precursor or kind of a warning signal to be wary of, OK, we're building up a fair amount of leverage in the system, right?

but you know when you look at what cme like you mentioned cme doesn't have nearly the leverage that like finance offers right um and so i think like you know on cme you're looking at like one to two x leverage you know at the most versus on finance you're talking like you know people getting up to like 20 50 100 x you know at the very extreme um and so i just think this is important to kind of keep in in account when you're looking at things like um you know i look at like market cap you know related to open interest so the you know how large open interest is relative to market cap, um, to kind of gauge, you know, what usually has been a gauge of how much leverage there's been in the system, but it's just, you need to be wary of now that, you know,

CME is the largest, um, you know, uh, futures exchange that, that that's not necessarily as bearish of a signal as it has been. Um, it's just something to keep in mind, uh, because, you know, there, there isn't that, uh, as, as large of a, uh, you know, amount of amount of leverage on CME versus some of these other exchanges. So we've talked in the past about this idea of these same contracts being collateralized with Bitcoin or crypto. And the whole idea of the collateral ends up being that we want as little of it being collateralized by Bitcoin. Right. And we actually when it gets higher, you get a little nervous and there's a whole bunch of reasons why. But what we've seen over the last couple of days or really the last

couple of months is that we continue to go down, but there was like a little bit of a spike over the last week or so. Like, how do you read into this? And do you get worried about these little spikes on this chart here? You can see at the end of this orange line, or do you not worry about kind of the smaller moves? Right. So in the short term, like when we were talking about a couple minutes ago about, you know, how to kind of gauge leverage in the system, one of the things I mentioned was looking at the coin margined open interest. So if you look at something, if you look a platform like Coinalyze is a great one. You can look at side-by-side the stable coin or USD margined contracts or open interest measured against the actual coin margined. And so what

this is doing is this is just looking at what's the percentage of all of the open interest that's specifically just coin margined. And so yeah, these short-term spikes can be a bit of a red flag when you pair it with some of the other things. I'm not going to rehash the whole thing, But, you know, what we mentioned five minutes ago in terms of like, OK, are we like building up a little dislocation of leverage in the system? Maybe we get a flush out. Right. But what I'm really trying to paint a picture here was just the broader the broader picture is that overall we have way, way less crypto margin futures contracts compared to what we did earlier this year. I suspect as we move past all-time highs, you'll start to see this increase because people are more bullish on Bitcoin and other crypto assets that they're going to be margining these futures contracts with. But we're in a good spot right now because it's showing you there's less convexity to the downside. Right. So if we have like a, you know, a large liquidation cascade like we did, you know, you know, on May 13th, what happened was, is we had such a large amount of coin margin contracts that, you know, as and I mentioned this like two weeks ago.

I know Dylan mentioned it last week, but I really think it's important for people to understand in terms of like how this affects market structure that, you know, in May, all these people were marked, you know, they were collateralized with crypto. So as their P&L was decreasing, their margin was decreasing as well. And so it creates people, people are more susceptible to being squeezed to the downside. So longs are more susceptible to be getting squeezed. And when you have low percentage of contracts that are margin with crypto, aka a larger percentage that are margin with stable coins or USD, that means that these traders on the short side are more susceptible to getting squeezed to the upside or short squeezes are more likely because when you're collateralized with Bitcoin, you basically have this inadvertent

hedge, right? So let's say you're short, Bitcoin price starts going up. Well, your P&L is going down because the trade's going against, you're betting price is going down and it's going up, but also your collateral is actually increasing because Bitcoin's price is increasing. So you kind of had this little hedge, right? But if you're collateralized with stable coins, and you don't have that. And so it's just more favorable market conditions for the bulls. When we look at Sopra,

this is, I feel like you and I have been talking about Sopra for so long that this one's never going away. But we had over the summer, we were under one, which is not good. Then we went back over one. We bounced off of it a few weeks ago. We're trending downward.

How do you think about, does that mean it goes down to one? Is there something else that happens? Sure, like if you look at the chart at the end of last year, we kind of just set these higher lows, um, as we moved, you know, you know, further into the bull run. So I don't necessarily think that we have to come back down and retest one,

excuse me, but if, if we do have a correction, like a major correction, you want to see us bounce off one. Um, and so, you know, just monitor this. If you have a glass note account and I'll, you know, throw it in the newsletter next week or, you know, tweet about it if there's anything to be concerned about, but, um, you know, ideally you would like to kind of see higher lows, right. As, as we kind of move move higher um but you know if like the point i'm just trying to get across is if we do have a correction you want to see us once again uh bounce off one as we did uh last month

well last month to me was confirmation that we were in bullish market structure um because you're also looking at in this chart you're looking at the seven day moving average basically weekly soper um and so this is like the the broader trend uh the daily like you can look at the daily version i just think it gets a little noisy in terms of like trying to identify like okay maybe not what's going on day to day. You can look at the non, you know, moving without the seven day moving average, but when you're trying to understand like, you know, what's, what's like this broader market structure, I think you can, you can apply the like seven or 14 day moving average. When we look at the whales, I'm fascinated by this. We have three lines, uh, basically on

this next chart. Uh, one of them is blue and one of them is green and one looks like it's almost like black or gray. And the blue lines are the smaller holders of Bitcoin. And it looks like they just they accumulate no matter what, basically. Right. They're just up into the right. They're going to continue to kind of almost dollar cost average, it looks like. But the green line looks a little bit more wavy, if you will. And that is the whales that have more than one thousand Bitcoin in their wallet. They were accumulating aggressively in September. Then they started to sell off at the start of october really and then it looks like they're accumulating again are they just trading like how do you think about that activity of they're not just long only that

there is some selling that's going on uh periodically yeah so first of all like this is relying on glassnode's entity uh heuristics so it's it's not perfect right and so like a month or so back you know i would look at the exact numbers but since then i've kind of changed my thinking just because, you know, like their heuristics aren't perfect. So you can't rely on like, okay, whales have accumulated exactly this amount of coins. And so I also have now started to throw a 14 day moving average on this to kind of smooth it out a bit. And so it's, I think it's still useful in the sense that we can look at what's the trend, right. But in terms of getting like the actual, like granular number, like raw number, I don't think it's, it's fully accurate

to look at in that sense but yeah like generally what you see is with with the smaller guys right we're talking about and the blue line is the the 0.1 to 1 btc guys like you said they accumulate non-stop right you look at this on like a broader chart since bitcoin's you know inception it's just literally like you mentioned you know up into the right and so you know if you're gonna like you know present you're gonna do like some kind of presentation on you know bitcoin as an asset to some you know investor like i would throw that in there right because you're basically saying like You have this hardcore, you know, group of people that dollar cost average, you know, dollar cost averages into Bitcoin no matter what. Right. They're buying prices up, down, whatever.

They're just, you know, they're just taking a passive amount of their income every day or every week or whatever, putting it into Bitcoin. With the whales, though, what you see with this green line is they generally kind of impact the movement of the market. Right. Because by definition, they're the larger buyers. they generally sell into strength and buy into weakness when we look at this in a very broad sense um and so it's not surprising to to see them have you know they initiated a lot of that selling on the way down moving into the summer um they bought you know some of the weakness over summer uh kind of you know initiated that rally into into july and they you know they took some profits as as we you know started to move down a little bit partially because they were probably

you know moving the market down a bit because they're large buyers by definition um but you've started to see them over the last two weeks uh accumulating again into the into this weakness that we've had since that failed all-time high breakout um and so yeah i mean generally though i don't i don't look at this on like a on like a day-to-day basis like i don't necessarily like say okay whales are selling like the market's gonna go down um but it it is interesting to see like you know people are panicking about like a shakeout for example like we had yesterday i Meanwhile, whales have been buying over the last two weeks into weakness. So I think to an extent, you could just look at this to kind of reassure yourself.

Like, okay, yeah, the smart money isn't freaking out. You shouldn't freak out either. When we look at the supply shock ratios, I think this is where it starts getting real fun. This was part of an epic thread. How long did it take you to put together the 22, 23 tweet thread? I don't know, man. Like two or three hours. I was just like two or three cups of coffee deep by the end.

it was a fantastic thread but when we look at these supply shock ratios what is this telling you sure so oh by the way you might think this is cool it's it's in glass node now so i got my like first metric like officially in glass which is like really really cool for for anybody else who likes to like geek out about this stuff but um but anyway yeah so this is comparing the highly liquid and liquid guys it's the illiquid guys so essentially um the the you know weak to strong hands. Oh, I'm sorry. This is the long-term holder supply shock. I thought you were pulling up the other chart. We can talk about this one. No, let's do the long-term holder supply shock. Okay. Yeah, sure. Okay. So, this one, this is looking at the short-term holder versus

long-term holder supply. And so, I've actually usually shown this inverse. So, people who are confused like, oh, I've seen this chart before, Will. Why does it look weird? That's why. It's the opposite of what it usually looks like. And so the reasoning is because I kind of saw this pattern, I was staring at it and I was like, hold on, like if you draw trend lines, right, we're basically in this kind of descending wedge, which by the way, is like a bullish pattern and technical analysis. But the point I'm just trying to get across here is that when we hit the bottom of this trend line, it's usually when we're at the bottom of these macro corrections. So if you look at, you know, between the 2013, 2017 bull run at, you know, at the bottom of the bear market,

we had two taps along the bottom of the line at, you know, at the very bottom of the 2018 bear market. And then also during March, we tapped the bottom of the line. And then above the upper trend line, that's been actually a good signal of when we've hit these macro peaks. So if you look at 2013, 2017, and so now, you know, after we just tagged the bottom of that, so it's kind of counterintuitive. When you hit the bottom of the line, that's actually when the market, you know, You're saying that the market is the most bullish because you have long-term holders that are, although this is at the bottom of the bear market, it's saying the long-term holders have locked up the largest amount of supply. So like the expected price appreciation is at the highest when it hits the bottom of this trend line, essentially. And so we've hit the bottom of the trend line.

So in other words, what that means is that long-term holder supply shock ratio is at an all-time high because the chart's inverse. and you're actually now starting to see long-term holder supply roll over a little bit, which we've talked about this many times, that's natural bull market behavior, right? You see long-term holders accumulate into weakness in the bear market. They kind of set the floor, lock up a certain portion of supply that kind of initiates the momentum into the next rally. And then as the reflexivity of a full-blown Bitcoin bull market takes off, it kind of becomes a self-feeding thing. And then the long-term holders can then start to sell their bags to the newer market participants. You're now starting to see the long-term holder supply roll over a

little bit. You started to see that right after we had that all-time high breakout. Since then, it's kind of flat, but it looks like it's kind of topping out, which is, once again, natural bull market behavior from these long-term holders. And I suspect you'll start to see long-term holder supply decrease more so, which means that we'll move, as I put in that arrow in that in that chart will move back towards the upper bound of of the descending wedge so it's counterintuitive what i'm saying is as we move higher back towards the upper trend line it means that long-term holders are selling their bags to short-term holders which is natural bull market behavior that makes complete sense and i think it's uh what you're really highlighting here is

multiple data points are telling us this exact same thing right which is we're in a bull market uh there's some short-term kind of day-to-day stuff uh that is natural um but that larger macro trend is definitely still in favor of those that are holding Bitcoin. The last chart that we have here is this entity adjusted rolling 90 day sum of coins destroyed. Jesus Christ, this is a long one. First, let's start with like coin days destroyed. I don't think people understand that concept and then tell us exactly what this is showing us. Sure. So for anybody who's very visual, I know sometimes I like start rambling all over the place. I put a thread out on my Twitter, like it's actually in that huge thread. So you can find it in there if you want to scroll

back a few weeks ago. But essentially like what destruction, this is a, you know, it's kind of like a core concept of on-chain analysis and something that like anybody who's trying to get into the space needs to understand. The, you know, the way I would explain it is if you move a coin to a wallet, right? So let's say we move one coin to a wallet for one day. It sits in that wallet for one day. It's now accumulated one coin day. If I then move the coin out of that wallet after one day, then it's now destroyed one day. Or if I move the coin into the wallet for 10 days, it's accumulated 10 coin days. If I then move it out of that wallet, then it's now destroyed 10 days. And so that's kind of the basis of destruction. You can run different ratios.

there's other metrics based off of destruction. But what this is looking at is the 90-day thing is just the rolling 90-day sum. So usually we look at like moving averages, right? Which is the mean. So you look at over the last 90 days, what's the average, right? And what this is doing is this is adding up the previous 90 days. So that's where the rolling sum comes from. And then you're entity adjusting it using Glassnode's entity heuristics. And what you see is that we were and then on top of this i threw i know this is like this is like a lot to to like throw at you but then this is i threw a 90-day moving average on top of the 90-day sum of coin days destroyed uh and so the point is like the tldr is that destruction is that as

is very low um in a broader sense um you know compared to to where we've been historically especially given price action, usually you see destruction at these lows in the bottom of the bear market. And the reasoning is because as we talked about, that's when long-term holders are accumulating the most. So that's when you're actually seeing coin days being created the most. Usually you see coin days destroyed at the top of a bull market. And so this is just another metric showing that you have really strong hodling behavior. And so this backs up all the things we We've talked about long-term holder supply, illiquid supply, hodl waves, average spent output lifespan, spent volume age bands, all these different metrics that are basically showing you the same thing that, you know, you have really strong hodling behavior. This is just another way to show that.

It's just showing that there's very low amount of coin days being destroyed or very low destruction, meaning that there's, you know, not many old coins being spent. When you kind of zoom out here, right? There's all this data. And I think that you and I love looking at this. My brother's like looking at it. There's plenty of other people on the internet, like looking at it. Hey, I've seen you, by the way, on Twitter. I like your tweets, man, because it's cool.

You're like, you're like pushing on chain. And that's awesome. I see you like pumping out stuff about like realize cap. I'm like, okay, Paul. Well, here's what I think ends up happening, right? Is as people learn more and more about the on-chain metrics, they start to realize that it's there for everyone to see. And it tells you so much about what's going on in the network. And if you don't look, it's kind of like if a publicly traded company was to have a daily

kind of earnings report, right? To some degree, you could see all this data, but you just say, I don't care about it. And so when you start to look at it, you start to one, understand the importance of the on-chain data. Two, as you start to understand where you are in these like macro cycles which i think is uh important uh but also three is it drastically kind of grounds you from a psychological standpoint because when you're just looking and you see oh bitcoin's up you know right now if you didn't come on and explain hey the reason why bitcoin's up right now is because there's big buyers on coinbase like all of a sudden you're like okay there's an action happening and now i have an explanation right and so i think as people become

more and more familiar with it i have a crazy thought for you this is the first time i'm ever saying this publicly, I'm going to say it to you because I feel like it's fitting, which is historically understanding accounting was the language of business. I think that on-chain metrics will be the language of money moving forward. And so it's, you know, whoever understands on-chain metrics, you are going to be the person who really understands money and understands the flow of capital and understands what's happening in the financial markets. If you simply just understand traditional accounting, but you don't understand on-chain metrics, you're almost going to be flying blind in a lot of these capital flows. And so I think that the work that people

are doing in on-chain metrics is incredibly important because one, it's not just a, hey, let me learn on-chain metrics, but also two, as you've done with some of the supply shock stuff, many others like Willie Wu or David Puel and Dylan and all these people, they're coming up with new metrics. And for years to come, people will use those metrics that are being created today as the standard way to measure various things. And I think that's ultimately what's kind of so cool about what's happening right now is just the data's there. It's how do you look at it? What perspective, how do you analyze it? Uh, and the community continues to kind of turn out better and better data analysis, uh, which then informs millions of people around the world.

No. Yeah. I think, I think that's, that's really insightful. I, you know, I've never thought of it in the sense of like, however you talked about, you know, accounting is the language of business on change that, you know, the language of money. I think that's, that's really insightful. Um, Yeah, I mean, like on-chain, you know, we essentially just have like x-ray vision of what's going on with all these market participants. And the data is the truth. And like, as you said, you know, you have the data and then you have the analysis around the data, right? And so, you know, like when I first started studying this, like my analysis of the data, just because I was new to everything, it wasn't great, right? Because I, like, first of all, didn't have a great understanding of it. Um, but you know, separating, separating the analysis from the actual data, the data is indisputable, right? Like we're pulling it from a blockchain. Um, you know, it's even, even people like to talk like, okay, what if you're manipulating

the data? Well, if you're manipulating the data, it's just showing what's going on in the data. Like, like even if you're, I'm still analyzing what's happening. Right. Um, and, and I completely agree with you. I think of it as we're essentially the economists of Bitcoin, right. And the problem is like, I've said this before, and then like all the Bitcoin, the hardcore Bitcoin people were like, yeah, well, that's a terrible, like, you know, you don't want

to be an economist. Well, it's like, I mean, the way I see it is like, well, economists haven't had, you know, indisputable data from a public ledger before, right? We have so much granularity, basically are tracking all the transactions that are going on on any given day, you know, and that's like privacy aside, right? Like there's like what Chainalysis does in the sense that like they're looking at who it is. I could care less who it is. Right. I just want to understand what's the market structure. I could care less about who the individuals are doing things.

And, yeah, I mean, that's exactly how I see it, that we're basically like the economists of Bitcoin. And as we move forward, this will be more and more important. We'll have new metrics come in. When you look at the stuff that we even had earlier this year, you know, I think a lot of, you know, kind of kind of the, you know, the silver lining from like an on-chain analysis perspective of, of the bear market, the mini bear market over the summer, that's what I've been calling it lately is that, you know, you had all these new metrics, this whole family of these supply related metrics specifically that we now

have that, you know, now these are at like the forefront of my analysis. We didn't even have them before May. And so I can't even imagine, you know, in the next year where we're going to be, it's, it's really cool to see, you know, people like you, you know, there's all kinds of new analysts that I see popping up on Twitter that are pushing out new metrics. And it's, it's a, it's a very tight knit community in the sense that like, you know, someone else will put out a metrics, a metric, I'll build something on top of it, or Dylan will build something on top of it. Right. And it's like this self feeding, you know,

we're, we're open sourcing the information, but you know, that's the reason why I really want to push the explanation of this stuff so hard is that if, if I explain it, it might, you know, hit off a light bulb with somebody else and they might run with some metric that I created. Right. And then they might take it a step further. And it just, you know, we can all win together in this little niche thing for now. I think, you know, at least for now, because it's, it's so small in terms of, you know, where, where I envision this going. I think like on-chain analysis and, you know, you know, I'm talking about like 10, 20 years, it's going to be huge. Right.

I think there's a good chance by the end of the bull run, you'll probably see on-chain metrics on like, you know, mainstream media like CNBC and stuff. This is the mainstream media. Well, you are on the mainstream media. Nobody watches that stuff anymore. John, Joe, what questions you guys got? You go first, Johnny. Yeah. Well, what's up? Congrats. You're fired up by the way. I love it. So can you talk about like, when do you see this, I guess, bull market kind of slowing down

with the historical past? And then when that happens, what are you looking at? What metrics are key there? Sure. So I would say to check out the thread that I put out two days ago, it's like my pin tweet. i put out 22 different metrics in specific that you can look at to gauge where we are in the bull market um all of those would be my answer uh and i'm like you know we could run through them all but i'm probably gonna have people asleep by the end of it but i was looking for some of those behaviors in the thread um and also this is kind of like a way i can like cop out of the answer but i would scroll through and check out um some of those things in terms of the behavioral trends

and then also like specific kind of like price targets. Yeah, I mean, I think it's hard to say though when the bull market ends because a lot of my buddies will come to me and say, you know, when is the bull market gonna end? That's what everybody wants to know. Is it gonna be December or January? I mean, I don't really see it that way, right?

I look at it more of like, what are the behaviors that we look to identify when the market is historically like getting overheated Or when is it a good time to buy? You know, when do one of those behaviors start to look a little toppy, right? And so like, as far as like timing wise, it's hard to predict, you know, what that would be. Historically, Bitcoin's topped out in December, right?

But that doesn't necessarily go to say that, you know, we definitely will top out in December. So I don't really have a base case for the timing specifically. I just know like what behaviors I'm going to look for, if that makes sense. Yeah, it does. I'll check out your thread too. Appreciate that. Joe, what do you got? Will, so thanks for all this.

The on-chain metrics are fascinating. I think not only us, but the people watching really appreciate them every week. So I appreciate that. But my question would be like when we zoom out, right? We've talked about this before. We all and you specifically have mentioned that we're going to be in a bull run right now, right? And you're anticipating that we'll hit $100,000 in price, whether it's at the end of this year or shortly thereafter, etc. Are you still sticking to that?

Are you feeling different about it? How do the metrics kind of tell the whole story when you look at all of them combined? Yeah, no, I think like, if you look at all those metrics in the thread that I put out, you know, the kind of consensus is, is that we're kind of lukewarm, right. In terms of, you know, how like overheated, if you will, we are we're, you know, we're not at, you know, the bottom of like a bear market in the sense that like, we have like insane amounts of room to run, but I think, you know, I think we still have a fair amount of, of, of, you know, room to go.

I don't really have anything else to say. I would ask too, like, maybe this is way out of left field and it doesn't have any correlation, but is there any kind of thing that you can draw from? We've seen a bunch of shit coins, frankly, start to get a lot of volume and start to get a little market exposure. Does that have any impact on the Bitcoin market or none at all? The way I see it is Bitcoin is the king in this space. And so when Bitcoin moves really aggressively, which I think we haven't really seen a real move in Bitcoin in that sense since the end of last year, you'll start to see the liquidity flow out of some of these alts. And then I look at the altcoins from a trading perspective as kind of a derivative of Bitcoin. And basically, there's a risk curve, right? And, you know, in a bull run, you can go out further on the risk curve. And so this is like something like Ralph Paul's talked about.

And like, I know all the Bitcoiners give him so much shit about like owning all coins, but he's a trader, right? And so what he's saying in terms of like, I remember he came on your guy's show and he was like, I'm really heavyweight ETH. The reason is because he knows that we're in the second half of a bull run. And the further you, you know, the further towards the peak of the bull run you go, the further out on the risk curve you can go in terms of the assets that you hold. And so, yeah, I mean, I suspect that a lot of these altcoins are probably going to run, right? And you'll see

these really large moves in some of these names like Solana, Ethereum, et cetera. I don't own those things. I own Bitcoin. But that's not to say that you won't see USD appreciation in those things. And they're, they're way more reflexive than Bitcoin, which just means like in the bull run, they're going to, they're probably going to outperform Bitcoin. Right. And then, but in the bear market, they're going to dramatically underperform Bitcoin. And so, I mean, I think you just, if you're going to mess around with that stuff, like you need to understand, you know, risk and, and understand like how these things behave with each other. Because at the end of the day, these things are really just kind of orbiting around Bitcoin. You know, if Bitcoin

If Bitcoin absolutely nukes, well, the market's going to nuke. I mean, maybe you have one or two coins that are like decorrelated from the rest of the market. But generally speaking, you know, Bitcoin has a large move. You know, the way to think about it is like altcoins being long altcoins are basically it's basically being short Bitcoin volatility. Right. And so if Bitcoin is volatile in either way, then you probably don't want to be long altcoins, at least in the short term. Gotcha. Will, when you think about all of these on-chain metrics, when you wake up in the morning, what do you check first?

Like, what's the very first thing that you're like, that's what I run to that because that tells me, you know, as much as I need as the first thing. Sure. It's obviously price, right? And then second of all, it's the derivatives data. Because I check like the on-chain data, at least on Glassnode, updates at 8.30 p.m. um so like i mean i'm on my computer like 8 25 like give me the data right and as soon as it

loads i'd like i get my fix right i figure out everything that happened for the day and that's it right like the data really doesn't fluctuate that much from an on-chain perspective like day to day um but yeah like the the derivatives data changes all the time right i'm talking about like funding open interest uh you know looking at like the cvd to gauge like spot like some of these different things you know the order books i watch those throughout the day i would say some of those things like definitely the the first two things that i check in the morning are what's you know price um you know were there liquidations if there's if there's a large move um and then also like you know what is what is what is funding and and um you know also like on open interest i look

at you know like we mentioned the coin versus stable coin thing like a bit of granularity but in general um the the derivatives data because that that like we mentioned that stuff really drives you know the short-term price yeah it's fascinating to me that's what you run to first It says so much about like the importance of that data set. So I appreciate it. Awesome, man. All right. Thank you so much for taking the time to do this.

We'll see you on Friday. All right. You guys have a good weekend. Take care. Thanks, Will.