The Pomp Podcast - #751 What Needs To Happen To Be Bullish On Bitcoin Again w/ Will Clemente

Episode Date: December 11, 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 on-chain analytics. In this conversation, we discuss the recent Bitcoin crash by taking a look at Bitcoin Fundamentals, on-chain metrics, explaining how the crash occurred, and what the on-chain data is telling us to be prepared for moving forward. ======================= BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

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. In this conversation, we talk about Bitcoin, the market structure, on-chain analytics, and where we go from here. I really enjoyed this weekly conversation with Will, as always, and I hope you do as well. Before we get into this episode, I want to quickly talk about our sponsors. First up is BlockFi. BlockFi provides financial products for crypto investors. Those products include a high yield interest account, a US dollar loan product against your crypto collateral, and a no fee cryptocurrency

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to book a meeting with one of their experts. Again, circle.com slash pomp and book a meeting with one of their experts. Big fan of Circle and I think you will be as well. All right, let's get in this episode. I hope you guys enjoyed 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.

Will, what's up, man? Hey, can you hear me? we got you dude cool how you doing we're doing great we just gave somebody a seven percent raise for uh the month of december in the audience how about that yeah that's pretty amazing that's pretty cool i uh put my name in that hat yeah you're doing all right for yourself uh all right let's start with let's go back two weeks you weren't on the show last week uh and there was uh a big flush if you will big liquidation two weeks ago if you had been on this show you were very not very bearish but you were pretty bearish you you had a i think a sense that hey things uh

may be going down here uh and most people say oh that's nonsense he's just saying that now whatever but literally you wrote a newsletter like we have the information uh so talk to us about what you were thinking kind of two weeks ago right before that big liquidation uh flush before we start talking about what's happening right now sure yeah so um i just threw two little excerpts in here for anyone um reading the letter and so i'll read them both they're both very short so two weeks ago, and for week 16, so this was two weeks ago, the week of Thanksgiving, I said, for Bitcoin, the short-term bearish case lies in the derivatives data. We are currently seeing open interest as a percentage of market cap unfazed by this recent drawdown. In addition to

this, funding seems relatively unfazed, as well as the limited amount of long liquidations that we've seen. Would not be surprised to see some kind of final liquidation-driven wick. And then last week, I kind of got even more cautious seeing that we still hadn't flushed any of OI. I said OI excluding CME, as well as just the perpetual swap OI are both near all-time highs in both USD and BTC terms. We've got a regime of positive premium or funding, which essentially are just showing the same thing, as well as long-short ratios.

We're at all-time highs with no reset, as well as the derivatives data shows a large buildup of OI. That will likely get released at some point. Just not sure exactly when. And, you know, this happened, ended up happening on Friday. Not saying that I knew it was going to happen Friday. But and then I said, you know, we'd love to see some kind of OI wipe out, followed by a regime of negative slash mixed funding, similar to what we saw in post-September of last year heading into Q4. So, you know, what I'm just trying to get at here is not just to shill like my call or whatever, but just to say that, you know, we were pretty, you know, preempted for this move. And if you kind of know what to look for in the derivatives data, then you would have probably been pretty risk off. You know, derivatives, if you're not paying attention to the derivatives data, you're really having a huge blind spot because the PERT market is the most liquid product in the Bitcoin market.

So it has the most impact on the overall price action for Bitcoin. And so that's something that you really need to be paying attention to. And it would have really costed you if you hadn't been paying attention to that over the last couple of weeks. So when you think about this, obviously, we get the liquidations, right? There's kind of price continues to fall, continues to fall. I think on some exchanges, it went sub 30K for a very short period of time. But most exchanges, it kind of went down around $40,000, $42,000, whatever it was. we came back uh you know by monday kind of mid 40s uh and we've been hanging around you know

maybe 48 to 50 000 how do you start thinking about that event before we talk about what's happening right now is that a market structure type uh like liquidation driven thing and people shouldn't read into um you know uh virus variants or any of the other stuff going on like it was just purely super illiquid market. Somebody came in, sold a bunch of Bitcoin, it created a bunch of liquidations and that's all there is to it. Sure. So, you know, I think you can look at this, there's several factors to everything. It's never just one clear cut thing. And so the way I like to see this, first of all, that the open interest is just almost like you think of pressure. And so that pressure has to get released at some point. So we had this large

buildup of pressure over the last month, month and a half. In combination with that, we had a lot of institutional flows that kind of slowed down. And part of that, I think, is just because it's the end of the year. We have these funds that are sitting on massive unrealized gains. And then we've had all this macro uncertainty, whether it be talking about the Fed raising rates as well as the, I can't pronounce, Omicron or whatever, COVID variant, whatever. I think these kinds of things, or especially the COVID variant news, I think it's kind of just an excuse for some of these funds to take profit because they're sitting on these large unrealized gains. So they're saying, hey, look, we don't want to lose these unrealized gains we have. Let's just go ahead and lock this

in for the year, right? Because funds are based on this yearly basis. And so I think you're starting to see some of that. And you could also kind of technically make an argument that you'll see those flows reversed heading into the new year because it's new year willing to take on risk, but you also have to consider everything going off macro. So pulling that aside, that's a whole nother discussion. But I think those things kind of played a part in terms of we've seen a lack of kind of spot bid. Meanwhile, you had, as we've talked about, the derivatives market positioned for more upside really aggressively. And so you kind of have this underlying likelihood for for some kind of move like this and then friday night uh the reason why it happened friday night

you know usually you see like you know elon tweeting like some sustainability flood or some kind of news driven event that really you know gives price the juice to really flush down and start triggering that cascade of liquidations um you know what actually happened was just the fact that the books were really really thin um and so if you're watching the order books this is something that i don't pay attention to extremely heavily but you know i i am in different group group chats or talk to different people who, you know, really pay attention to this kind of thing. And so, you know, I got several messages saying, hey, look, you know, the liquidity is really drying up. You know, the bid ask spread is widening. You know, the books are just getting

really thin. And so essentially what this means is on the order book, you have, you know, bids and asks, which are essentially orders saying, I, you know, I'm not willing to, you know, buy or sell, interact with the current market price, but, you know, I'll be a willing seller at, you know, X price, or I'll be a willing buyer at X price below. And that's what I deem fair value for Bitcoin and where I'd be interested in starting to average in a position. We saw all those bids and asks almost completely disappear leading up to this event. So it was actually the least amount of liquidity since the move before May. And so what that meant is that if you were coming in looking to trigger some kind of move like this, you know, it was very easy for you to kind of,

you know, trigger this kind of cascading effect. I think it only, it was like 8,000 Bitcoin really kind of triggered this move, which, you know, usually isn't a whole lot for, you know, the overall, you know, Bitcoin market. And it can usually absorb that really well, but because there was such a lack of, you know, orders in the books that, you know, as soon as we saw those spot orders hitting the market, then that really kind of moved the price down and started to trigger that cascading effect. And so like, you know, I know this is kind of a meme that like, oh, wills manipulate the market and whatever, whether you want to call it manipulation or whatever. I think this was honestly a planned event. I think someone was looking at this and said,

hey, the books are really thin. We've got all this OI to flush out. We've been in a regime of positive funding. Long, short ratios are at all-time highs. Let's go ahead and just trigger this thing, right? Somebody's got to do it. Let's just rip the Band-Aid off. You could easily go short trickle that triggered the cascade and then, you know, cash in big on some kind of move like this. And so, you know, I definitely think this was an orchestrated thing in the sense that, you know, someone saw an opportunity and took the opportunity. But at the same time, you know, I don't think it's something like you should be outraged because whales are manipulating the market. I mean, this is just an opportunity that was there in the same way that,

you know, you see a lot of shorts building up. And, you know, I think the kind of people that They're saying like, oh, this is manipulation or it would be the same people not to complain if you saw, you know, a large short, you know, liquidation event because, you know, some whale saw there was advantageous to trigger shorts. You know, it's just that was the setup that was that was there at the time. And I think someone just took advantage of that. All right. So I want to talk about what's going on right now. When we look at a lot of these metrics, you've put out the first chart for today is this open interest dominance. And basically what you've done is you've drawn this line here that's showing kind of a resetting over and over again. So explain what open interest dominance means and then what you're seeing here with this chart.

Right. So first of all, let's just talk about what open interest is. So open interest is all the total amount of all the open contracts in the Bitcoin futures market. And specifically in this chart, I'm looking at the perpetual swap market only, which it's not actually labeled. that I forgot to label before I sent the letter out. But this is looking at specifically only the perpetual futures open interest. And so what this metric is essentially trying to show you is how high open interest is relative to market cap. Because, you know, if open interest is at $100 million and, you know, Bitcoin's market cap is a billion dollars, that matters, you know, a lot less than, you know, if open interest is $100 million and Bitcoin's market cap is,

you know, $150 million because it has a much larger weight as a, you know, percentage of what market cap is. So it's more influenced by the derivatives market. And so whenever that decreases or you see these flushes, that means that the market's now driven more so by spot than derivatives. And so when you look back at this chart, you'll see earlier this year, heading into the all-time highs in kind of mid-May heading into, I'm sorry, in mid-April heading into May, we were really high in terms of this metric. So, you know, open interest was really mooning. We had all these traders, you know, thinking, okay, Bitcoin's going to the moon, I'm going to leverage long. They all got wiped out in May. And then from there,

we built up a lot more open interest. This time it was actually shorts heading into the end of July. And so, Pomp, this is something that, you know, you and I were on top of at the time. We were watching funding go negative as price was grinding higher. We were talking about the likelihood of a short squeeze the week before we got a large short squeeze off the lows. We had 10 straight days off the lows, wiped out all that open interest that was majority shorts or aggressively shorts, I should say. And then we had another wipe out on that failed break above 53K. And part of the reason behind that was that alt funding was really mooning. And so that's that's where, you know, we learned that you also need to be paying attention to the alt market as

well. Because I think at the time, I'm going off on a little bit of tangent here, but I think at the time, people were saying, well, Bitcoin's going to break out, then I'll just go ahead and front run the fact of, you know, you could just go out on the risk curve and long alts. And so people were all longing alts, and you saw that through funding, but we were just, you know, tunnel vision looking at Bitcoin. And so that's what kind of triggered that event there. Funding relatively muted at the time for bitcoin on that on that third flush um above you know in september of this year uh but uh funding on alts was like 250 apr and so that kind of assisted in triggering a flush there we wiped out a lot of the open interest uh we moved down to about 40k uh kind

of double bottomed before moving higher and then most recently we built up a lot more open interest um we've we've kind of set this this uh you know higher kind of zone over the last couple weeks of of open interest and we've just kind of been hanging out there uh and then recently this last week we finally flushed that out back down to the lowest point since may which means that the market is is uh you know the most spot driven uh or spot dominated since may because now you know all the leverage guys that just got wiped out are really hesitant to get back in the market because they just got completely obliterated especially like uh by bit which tends to be like a more retail driven exchange,

Bybit OI got wiped out by like 50%. And so you're seeing that now these people are absolutely obliterated. Now you're seeing that the market's a lot more spot driven. Okay, now I want to talk about this second one because there was a second metric that I think you were watching pretty aggressively here. And this is basically looking at the long short ratio

specifically around the perpetual market. And so describe a little bit about what that means. What is the long short ratio in the perp market? And then why were you a little cautious when you started to see what was happening? So, first of all, I think it's important to understand that I think there's a bit of a misconception around this metric in the sense that it's not saying that there's more longs than shorts, which I know seems a little confusing, but there's a short for every long and a long for every short.

So, it's just a contract and someone's taking the other side of that contract. And so, what you really need to think about is what is the risk of the people on both sides of those contracts? So, for example, you could have a retail ape on the long side that's saying, I think Bitcoin is going to go to the moon. And then at the same time, you could have a market maker on the other side of that contract. And they may be short the PERP contract, but they could actually be long spot as well and just be delta neutral because they're a market maker. So market makers are delta neutral, meaning that they have no directional bias in the market. They're just providing liquidity and then they get paid a fee by the exchanges.

So what I'm saying is it's key to understand that there's a long for every short and a short for every long. It's just about what is the risk that each size of that contract are holding. With that being said, what the long-short ratio is showing here is the amount of accounts that are net long versus net short. And so kind of the idea behind this is that when you have the majority of market participants that are positioned a certain way, that likely means that, you know, that's, that's over, you know, whenever you have something that's consensus generally that the opposite happens. And so we had, we had an all-time high in terms of this long short ratio on Binance, which is the largest, you know, largest exchange by volume and open interest. And so that meant that, you know, retail was really aggressively positioned for

higher prices without any kind of major flush out or shake out event. And so that paired with some of the other things we talked about also had me really cautious. But that got wiped out pretty substantially during that move as well, which is a good sign because now you've seen some of that kind of exuberance or greed kind of flushed out of the market. All right. The last thing on the perps is the funding rate across all exchanges. What are you seeing here in terms of kind of negative or positive funding rates? Sure. So first of all, I know we talked about this a fair amount, but for maybe anybody who doesn't know, the funding rate is based on premium, when the premium is the difference

between the perpetual contract price and the weighted spot index price. And so it's essentially a mechanism that incentivizes market participants to keep the PERP contract pegged to the weighted spot index price by paying out a funding rate for taking the other side of the trade. So when funding is positive, longs are paying shorts, and when funding is negative, shorts are paying longs. So funding is really useful in two ways, in my opinion. So A, when price is diverging from funding. So, that just means when, for example, price is dropping and funding is rising or, you know, price is rising, funding is dropping. And B is when there's a regime, meaning kind of an extended period of time when funding is either rising, positive,

negative, or mixed. And that also needs to be paired with high open interest that hasn't been flushed yet. The reasoning I tag on that extra point, it's really crucial to understand because if there's no open interest, who cares about the funding? Because, you know, the open interest doesn't have a major impact on the market right now. So for example, you know, funding is less important right now than it was, you know, call it a month or so ago, just because OI got wiped out pretty heavily. I mean, it's still important, but it's not, you know, as important. And then so two examples of A, so I said A was when price is diverging from funding, B is when there's a regime. So two examples of A were, first of all, when we, when we squeezed off the summer lows,

price was moving up, funding was dropping, especially on Bybit. And then also another example would be after the all-time high breakout last month, when price started grinding down and funding was mooning. So, you know, you had that dislocation there. And then this, this, this most recent flush was more of an example of B. So meaning, you know, we had a prolonged kind of regime of positive funding paired with all the, you know, we talked about the long short ratio, as well as we were at all-time highs in both btc and usd terms nearly on on the perpetual open interest as well as open interest excluding uh cme um and so so going off of this kind of idea of regimes we talked about well actually i was on the show last week um last week in the newsletter i i

showed like this kind of zoomed out view of uh of all of the all of all fundings of you know history since like march 2020. and so to just kind of walk through this briefly uh i won't like get into it it too much. But so after the March liquidation cascade, we were in a regime of negative funding and we were prices grinding up, meaning traders were essentially in disbelief, which is what you really want to see if you're a bull. Heading into kind of the September area, once we kind of, if you look at the chart, in September of last year, we kind of had this plateau up on the price action. So we went up, kind of plateaued out, and then we had this 20, 20% move down. On that initial move up when we were plateauing, funding was mooning. And it was like the highest it had

been all year, meaning that, you know, perp traders were saying, oh, you know, we're going straight to all time. We're going straight to 20K. You know, you know, this is it. Right. And so then they inevitably kind of got flushed out. And so we went from regime of positive funding, then that got flushed out. And then after September, after that 20, 25 percent correction in September of last year, we were in a mixed regime, meaning that we had both negative and positive and majority negative. And that's what you really want to see if you're a bull, as well. I mean, what you really, really want to see is just straight negative. But, you know, generally, like if you're in the Bitcoin market, you're by definition, you know,

bullish on assets. So generally, you know, you're going to see, you know, mixed funding at a minimum. But that's really showing you uncertainty. Mixed funding is showing you kind of uncertainty from perpetrators or kind of lack of, you know, full just kind of like, you know, bullish outlook, right? Versus, you know, seeing funding really high. So mixed funding is saying, you know, oh, we're kind of unsure, right? We don't know anymore after that September flush. Oh, we don't know anymore if we're going to go straight to all-time highs. And that really kind of put us in a favorable spot for this disbelief rally that we had into October of last year, led us into that all-time high breakout. And so what you want to see now that we've just

talked about, over the last month and a half, we've been in a regime of just straight up positive funding with no reset. We finally got that reset. And what that means is that initially when we had this liquidation move, that by definition, the PERP price is going to be below the spot price just because you have forced selling. So you're always going to see negative funding on some kind of liquidation move just because by definition, PERP traders are becoming forced sellers during that cascade. The PERP price is getting driven below the spot price. But where you're really going to get this gauge is in the day or two or week or two after. And so in the two days following that event, we were straight negative. And then since then, we've seen it go negative again

briefly, and we're still just flat. And so what I'm trying to get at here, I know I'm rambling here, but what you want to see, the TLDR, is that you want to see Bitcoin consolidate and carve out a regime of mixed to negative funding, similar to what we had at the end of September. So what I'm saying is that you want to see these perpetrators essentially unsure, or ideally in disbelief of, you know, some kind of move that we potentially have to the upside eventually. You know, I'm not saying that, you know, this will happen for exactly this amount of period of time. I'm just saying this is what, you know, would put us in a favorable position for more upside. If you're a bull, you want to see this kind of mixed regime of funding moving forward

along with some consolidation. Got it. And so when you start to look at the on-chain cost basis, the funding rate, I think for most people, it's interesting. They understand it, right? You're doing a great job explaining it. But to me, this idea of on-chain cost basis and are we above or below where that is seems to be like a really, really important component. And right now we're sitting below this. So first describe what exactly is on-chain cost basis and then what does it mean when we're below it for a period of time? Sure. So for technical traders, the way you can think of this is a volume weighted average price. But for anybody who's not technical, it's just looking at the average price that investors bought in. And specifically, we're looking at short term

holders. So these are entities who have held their Bitcoin for less than 155 days. And so we found that this kind of price level is really important in terms of how Bitcoin price action has interacted with it. What we see is that whenever it retests, that's generally a time you want to buy when we're in an uptrend. We'll talk about this, I guess, at the end, but I'm trying to get away from this concept of these binary bull and bear markets. And remind me to talk about that at the end. I don't want to start going off on a tangent while I'm talking about this, but I do want to talk about that at the end though. But yeah, so whenever we're below, it's generally a time to be cautious. And then whenever you have these kind of, so when we break below, you can have

bearish bias. And then when we have these underside failed retests, that's when you get that confirmation. So you look at 2017, we bounced off this several times. We broke below after that blow off top. And then we got confirmation when we had this failed underside retest, aka dead cat bounced back up to that on-chain cost basis and got rejected off of that. Had three more rejections headed in kind of the depths of the bear. When we finally broke back above that, that kind of signal that we're coming out of the bottom of the bear market, had this kind of mini rally into like 14K in 2019, which was primarily driven by the plus token kind of artificial lockup of coins. Moved back down and we kind of just kind of went sideways leading into the COVID crash.

Finally broke back above and then we got that confirmation. So that confirmation is really key. We got that confirmation in September of last year after that move we just talked about when we plateaued, flushed down 20, 25 percent. We retested that cost basis there and then moved higher without retesting it at all. Broke below in May. So that's where you would have, you know, ideally wanted to want it to be risk off. came back, broke above coming off of those lows in about in like late August, retested almost a textbook reset at the end of September of this year. And most recently, we bounced off of this last week. But then this week, we've now broken back below. And so to me, you know, this is this

is a signal of caution. And so, you know, I think as an analyst, you know, your job is to really remain objective and pay attention to what the market is telling you rather than, you know, what you want, what you want to happen or what you hope is going to happen. And, you know, at the time, just being objective, we've broken below the short term holder cost basis. It's, you know, it's time to be cautious and, you know, all happily. And I'm not saying like I'm like a gigabay or like I'm insanely bearish. I'm just saying that, you know, I'm not a bull until we reclaim this. And that's at 53K right now, which also aligns with, you know, the trillion dollar market cap threshold for Bitcoin, as well as also a pretty solid technical level as well.

But, you know, until we reclaim that, you know, I remain to be kind of cautious and, you know, not definitely not bullish, you know, at least in kind of an extreme way. And so, you know, for the bulls, you obviously want to see this reclaimed. If this gets reclaimed, then I'll happily flip bullish again. I'll say, OK, look, guys, the market has showed me that we've now come back and seen strength, you know, and I'll happily go by what the market is telling me. But right now the market is telling me to be cautious because we're below the short term holder cost basis. Um, for the bears, you know, bearish confirmation would be, you know, retesting this from the underside, as, as you can see on the left-hand side of the chart, when we had these failed underside retests, um, after 2017 heading into 2018, um, you know, if you see a failed underside

retest, that's confirmation that you really want to be, uh, you know, risk off. Um, so, you know, TLDR, as long as we're below 53 K, I'm not bullish. Um, if we can reclaim it, I'll happily, you know, flip bullish again. Uh, and then bearish confirmation would be this failed underside retest. All right. We only got a couple of minutes here. So last thing is supply shock ratios. What's going on there? This is a little bit of a good news, but what, what, uh, what are you seeing there? Sure. So, um, you know, just some like, you know, positive, I guess, uh, some positivity to leave you with. Uh, it's just the fact that you've seen a liquid supply increasing, which means that supply is moving to entities who hold at least 75% of the coins that they take in.

So you kind of think of these as, uh, the strong handed market participants. And so this is a lot different than what we saw in May, where you saw this completely, you know, draw down. And so that to me, that's showing that, you know, you have these kind of fundamental investors that are coming in and locking up BTC, which is a great sign. But, you know, again, you know, I'm just waiting to see if we can reclaim 53K. I think there's a lot of different dynamics going on right now. We have, you know, on-chain supply dynamics look great. But at the same time, we have macro, you know, there's a lot of uncertainty there. You can also make an argument that Q1 flows are going to be bullish because, you know, it's a new year, fresh P&Ls,

risk, hunger, you know, we'll definitely see if that is the case. I think the first week of Q1 will be really telling, kind of judging, you know, are we seeing strong flows or not? But, you know, I think like what my buddy Pintoshi calls this is analysis paralysis, right? You're looking at so many different things. You know, I look at like order books on chain, some fundamental analysis, macro, I mean, I'm looking at a bunch of different things. And so like, you know, lately, I've kind of been going through this process of kind of synthesizing, you know, how I can, how I can, you know, really simplify my view on the market. And so for now, I would say that, you know, 53K is my line in the sand. If we reclaim that, I'll, you know, go back to being

bullish. But until then, you know, I'm cautious. And then if we have a failed underside retest, then I would flip bearish. Got it. Joe, John, what questions you guys got? Hey, Will, what's going on, man? So mine would just be around the hash rate real quick. What are you thinking on that? I saw we just hit a new all-time high roughly six or eight months, I guess, after China banned, after the China ban. What do you look at from an on-chain metric perspective when it comes to that? Yeah, I mean, I just look at hash rate as well as, you know, difficulty, just, you know, basics. You know, I think hash rate coming back online really just reflects the resiliency of the Bitcoin network, right? We had this massive, you know, migration

of miners out of China. They completely plugged back in online across the world in a completely decentralized way. No one coordinated it. Right. And it just shows you like, you know, Bitcoin is almost like a starfish. Right. You chop off one of the arms. It's going to grow back to. Right. You know, there's there's there's you know, it's just it's just so resilient. And, you know, this this has just been a reflection of that, in my opinion. No centralized authority can can shut Bitcoin down. And, you know, it's been it's been really impressive to see how aggressive hash has come back online. Now we're nearing all time highs. And we had like eight consecutive positive difficulty adjustments was just another another way of just reflecting that you know how aggressive

this has come back online um you know one other thing on on hash rate is uh you can look at the hash ribbons when it comes to price and that that's looking at like two different moving averages of hash so it's telling you when we kind of come out of these minor capitulation events if you're looking for like a way to kind of correlate hash with price but generally you know i just look at hash and difficulty my bad to cut you off joe no i was just saying i like your analogy of the starfish that's a good one john what questions you got yeah so mine would be around new addresses getting involved in bitcoin i realized a few days ago we hit an all-time high of 0.1 at number of addresses it was just under 4 million that own or uh excuse me it was 3.29 3.29 million that own

0.1 bitcoin are you seeing that in the data are they like really making any difference here No. This always turns up. It's a great thing when you're talking about being a long-term fundamental Bitcoin investor in the sense that you're seeing adoption increase, more addresses being opened. But yeah, in terms of anything that translates to price, it's pretty relevant, to be honest. You see this, though, for the long-term guys, I guess you might find this interesting. Over time, you see addresses as well as entities, which are forensically clustered addresses, you see, you know, the balance of the little guys going just up and to the right over time, which just shows, you know, adoption over time, it's just increasing, right? And,

you know, the way I think of that is like, if you're familiar with like Ray Dalio's big debt crisis, he talks about like the long-term debt cycles. And if you look at that, you know, there's this line that goes from the bottom left to the upper right-hand side, and it's just productivity. And then overlaid, you have the, you know, long-term and short-term debt cycles on top of that. But when I think of like, what is that line that really is that productivity line and that framework that Ray Dalio has and kind of applying that to Bitcoin for the Bitcoin market, that would be that is in terms of, you know, just seeing these, you know, constantly new users coming on the network, as well as when you just look at the percentage of, you

know, supply that the little guys hold. So you run the ratio of like total supply divided by, you know, the amount held by, you know, entities with less than 10 Bitcoin or less than one Bitcoin. And either way you want to, you know, cut it, you see that trending up into the right only. And that's not even considering the fact that most of the little guys use custody services. So like most of the most of the entities that we see as whales are actually custody solutions holding Bitcoin for like millions of people. But my point is just saying, you know, like that chart is really bullish for long term investors in terms of showing just like adoption increasing over time, but has no real effect on price and like any kind of shorter and immediate term.

All right, man. If you had to guess and Devere, you got a price prediction in terms of the next three weeks, what's going to happen? You think we could just go sideways, up, down? What's your thoughts? Yeah, I mean, you know, I kind of just go back to what I said about like, I think there's so many factors right now and that it's easy to kind of get caught up in different things. Oh, well, unchanged supply looks strong. Macro is really uncertain. So I think like the best way to kind of combat that is just setting really clear invalidation points for yourself and saying, you know, it's kind of speaking in an if-then format. So saying, if this happens, then I'll believe this. If this happens, then I'll maintain this bias. So for me, that line in the sand is 53K. Gun to my head, though, I think we just consolidate. I think we're just ranging. I think we're going to kind of consolidate here for a while, carve out kind of this regime of mixed to negative funding. Maybe we then end up coming out of this moving higher in the next couple months. But, you know, you just have to adjust to, you know, what the market is telling you. And right now, you know, we're definitely not, you know, kind of, you know, strongly, you know, bullish like we were back in August heading into that, you know, big October we had.

You know, for now, I think you just need to, you know, just set clear validations for your ideas. Well, people are saying, I read some different articles about kind of a 40K resistance. What do you think about that? You know, 43K was just a really strong level. uh you know from earlier this year as well as like in September um you know I think there's a fair chance we could you know range between like 40 to 50 um you know I guess my I would have to like show you the chart because I'm not gonna be able to word this well but I think we probably range between like 40 and 50 and then we could have some kind of like failed move down to

like 35 similar to what we saw over the summer something like that I'm just spitballing though But I mean, 40 is a pretty strong level. I think that, you know, we probably range above that, but, you know, we'll definitely see what happens. But yeah, 40 is a pretty strong level of support. I would suspect that holds at least if we were to go down there, you know, and, you know, test it at least the first time that we retested, we'll see that probably hold as support. But I mean, I'm just I'm kind of just a crab market maximalist right now. I think we probably just go sideways and, you know, carve out this regime of, you know, positive, negative funding before, you know, whatever happens next. Crab market maximalist. All right, buddy. Thank you so much. Anyone who's not following Will on Twitter, what are you doing? Let's go. I'm going to drop his Twitter account here in the chat. Make sure you go follow him on Twitter. uh he's got the uh newsletter as well creeping up on the 500k i told you 500k by the end of the

year let's go will come on we got three weeks got 40k followers well we need to get you verified i saw you uh going at twitter yeah you know man it's just you know i mean i'm not gonna lie like obviously you want to get verified right but like at the same time you know i i had people that i've literally got scammed like like like you know joke jokes aside like one guy got scammed like he might have just been like trying to say this to scam me i don't know like scam psyops but he said he got scammed out of like 150k and so like you know regardless like i know people are definitely like you know getting scammed by these imposter accounts it's just i just find it annoying quite frankly like just knowing that like people are doing that in my name you know but you know what

are you going to do? I reached out to Twitter and did everything I could. So we'll see what happens, I guess. I'll tell everyone right now if someone promises that you send them one Bitcoin, they're going to send you two back. It ain't coming back. All right, buddy. Thank you so much for doing this. We're going to see you again on Friday next week.

All right, man. Hey, and for the people listening, be sure to check out Pomp Game on my podcast. That is true. It'll be out tomorrow. Wait till the union finds out all the shit I talked about them on the podcast. We're not worried about you, dude. All right.

We'll see you later, Will. Thanks, Will. Take it easy, guys.