The Pomp Podcast - #848 Can Bitcoin Stay Above $40k? - BTC On-Chain Analytics

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. In today's episode, Will Clemente couldn't join me for our weekly sit down. So instead, I just break down all of the charts that he put together. We try our best to go through the on-chain metrics and explain what the hell is happening with Bitcoin and why has the price been falling. I hope that you enjoy this and please bear with me as obviously I'm nowhere near as astute in these metrics as Will, but I'm doing my best to keep up. So before we get into this episode, though, I want to quickly talk about our sponsors.

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Starting point is 00:03:43 dive into some of the metrics and see exactly what's going on using on-chain metrics and macro data. Here we go. So first, if we get started, we got to look at price. And Bitcoin's been trading somewhere between $40,000 and $44,000 for a couple of days now. That's up about 20% to 25% since the invasion of Ukraine started. There's a lot of people who've been talking about Bitcoin. Is it a safe haven asset or is it not? And it looks like many people around the world, the market in general, is going ahead and placing a premium on the asset. We also know that Bitcoin has been trading at an all-time high when measured in rubles. But if we look at the underlying network itself, those statistics is that Bitcoin is trading somewhere around $750 to $800 billion

Starting point is 00:04:23 in market cap. We know that about 90% of the supply has already been issued. And of course, there are about a million active addresses every single day. Miners are being paid between $35 and $45 million per day, sitting right around $40 million today. And then ultimately, if we go and we look, Bitcoin is actually down almost 20% over the last 12 months, but it's up 350% over the last two years. That's because of the base effect. Last year, Bitcoin went from $30,000 in January all the way up to $64,000 in about March timeframe. And so ultimately that base effect is affecting that one year return. But Bitcoin still only has spent about 300 days above the current position. So about 94% of all of Bitcoin's life has been at a lower price point. If you bought

Starting point is 00:05:13 then and held till now, you are in profit. Ultimately, if we go ahead and we take a look at the compound annual growth rate, what we see is that Bitcoin is still compounding annually at 145% over the last 10 years. And that five year sharp ratio sitting above 1.5, making it an incredibly attractive portfolio diversification tool and also a great risk reward. If we then come in and we take a look at a number of different metrics that show us the behavior of those holding Bitcoin or various activity on the Bitcoin network. We can see in this week's Blockware Intelligence newsletter written by Will Clemente and the team over at Blockware. It's showing that there's three separate metrics that are all telling us that we're near a bottom. Doesn't

Starting point is 00:05:56 guarantee that we're actually at the bottom, but definitely that we're nearing one. We can look at a Bitcoin entity adjusted dormancy flow. Again, very, very low compared to historical numbers. If we then go and look at the entity adjusted MVRV comparing Bitcoin's valuation relative to the value stored in the network, again, relative basis, very low. And then ultimately, if we look at the mayor multiple, one of the classic metrics to measure Bitcoin compared to the past price movements, we see that the mayor multiple is quite low as well. And so ultimately, these metrics don't tell us, hey, you should buy or hey, you should sell. But what it does show us is on a relative basis, Bitcoin is drastically undervalued to where it's been in the past, according to a number of these network metrics. Now, many of you are probably wondering yourself, why is it that Bitcoin is being bid up during a time of international conflict, of uncertainty and chaos? Well, Lynn Alden had a great tweet over this week where she said that the world collectively has about 15 trillion dollars in official sovereign international reserves.

Starting point is 00:06:52 Less than 2.5 trillion of that is gold. The rest is fiat. And the fiat portion can be frozen for that country by other countries. Even a sizable percentage of the gold portion is international custodial, meaning that many countries let other countries hold it for them. The vast majority of sovereign reserves are permissioned assets and thus aren't really sovereign. Of course, if you have an asset like Bitcoin that is digital, that's decentralized, that it is resistant to both censorship and seizure. There's a lot of people in the world that are waking up to why that may be important moving forward into the future. And so ultimately, this is why we're seeing Bitcoin get bid up. So there's many people saying maybe in the words of Satoshi, I should get some in

Starting point is 00:07:33 case it catches on. But one of the things to be really careful about is that the narrative of Russians or Ukrainians buying Bitcoin, they were not seeing that in the data yet. This tweet from Willie Wu on March 2nd shows that local Bitcoins, the peer to peer Bitcoin trading volume in both Ukraine and Russia are not showing any significant uptick. And so what's more likely is that people elsewhere outside of Russia and Ukraine are realizing the value of Bitcoin. They may even be speculating that Russians and Ukrainians could go buy Bitcoin, and therefore they're all going and buying it, even though they're not in the conflict zone. And so ultimately, Bitcoin being up materially since the beginning of this geopolitical conflict and invasion is something

Starting point is 00:08:14 to keep your eye on. But remember, there's a whole macro world out there. We're watching everything from energy prices increase. We're watching movements in the yield curves. Every single piece of the global economy is under duress or is under movement right now. And so you've got to be able to look at Bitcoin through the global macro lens. It's really hard to do. And so ultimately, if you simply are like me, dollar cost averaging and saying it doesn't matter what happens in the world, I want my Bitcoin and I'm going to keep holding them, then you're probably going to have a lot less stressful life right now. I hope this is helpful and we'll be back to normal programming next week. Hope you guys have a great rest of your weekend and talk next

Starting point is 00:08:51 week. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into that three-week time period go to pompscryptocourse.com to learn more and i'll meet you guys for the next episode

The Pomp Podcast - #848 Can Bitcoin Stay Above $40k? - BTC On-Chain Analytics

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