The Pomp Podcast - #961 Why Did Bitcoin Crash Down To $25K This Week?

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 00:03:24 your customers or a SaaS, DTC, or any business that has recurring revenue, sign up at pipe.com slash Pomp. Again, pipe.com slash Pomp to start trading today. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, so obviously this week was absolutely insane, but Bitcoin recovering nicely, sitting right around $30,000. You can see that it's trading right in tandem with many

Starting point is 00:04:08 other assets. If we then go and we look at the Bitcoin statistics themselves, the Bitcoin market cap sitting just under $600 billion. Still about 1.77% inflation rate. And of course, over 90% of the 21 million Bitcoin have actually been issued. The real exchange volume coming down drastically under $4 billion now. But miners, they continue to get paid to secure the decentralized secure computing network of Bitcoin. But now they're only being paid $27 million every 24 hours. Bitcoin has traded down 56% from its all-time high, but it's up about 15% from the recent low. If we then go and we take a look at Bitcoin versus gold in the S&P 500, we can see that over a one-year period, Bitcoin down significantly 40%,

Starting point is 00:04:51 gold down one, and S&P 500 down two. But if you zoom out and look over a two to 10-year period, Bitcoin has drastically outperformed gold and S&P on almost any other timeline. And then, of course, paying attention to Bitcoin's closing price history, we can see that Bitcoin trading right around $30,000 means that there's only been about 487 days in its history where it's traded higher than this. And so if you bought Bitcoin and held on 90% of days until today, you would be in the money, but still 9.98% of the time, it was actually trading higher than it has been today. If we then go and take a look, we can see that the compound

Starting point is 00:05:27 annual growth rate of Bitcoin is 138%, still drastically outperforming gold, S&P 500, NASDAQ, and TLT. And then that five-year sharp ratio coming in at 1.26, still making it an attractive way to add to your portfolio and have a positive impact. Let's jump now and go take a look at Will Clemente and the Blockware team. They've got an excellent newsletter that they put out every Friday. And in this week, they've got some great charts. First, we have the net realized profit and loss. We can see that about $2.5 billion in net realized losses on two separate days just this past week. Now, if we jump and we look at what's causing all of these problems, everyone knows that Luna and Terra ecosystem has had major, major issues, including their altcoin going literally

Starting point is 00:06:09 to zero and the UST stablecoin losing its peg. You can see that this Luna Foundation Guard balance of Bitcoin was growing nicely and was holding price up. All of a sudden, it's dropped and basically they have no Bitcoin left. Now, that's resulted in some of the largest days of net Bitcoin inflows to exchanges in nearly five years, which Blockware and Will have identified nicely. You see it here in green on the far right of this chart. Then we can go take a look at whale balances, and we see that whale balances continue to decline, which is a theme that is going to be important to watch as we move forward. Then, of course, the short-term holder cost basis. We're trading underneath it, and we've gotten rejected off of that a couple of times, and it continues

Starting point is 00:06:50 to go deeper and deeper. That means that, of course, the short-term holders, they're in trouble. Then if we go ahead and we take a look at realized price, we can look at something like a top or bottom model. And we can see that those realized price were getting close, but the aggregated cost basis of all investors on chain currently sits around $24,000. And so any price below the realized price should be seen as extreme value. Now let's jump to the MVRVZ score. And that compares Bitcoin's market value to the realized value. And in that we can see in this green zone, We're getting close to a generation buying opportunity. And so then if we jump to something like the entity-adjusted dormancy flow,

Starting point is 00:07:29 we see here we're in the green. It's flashing a buy signal. Then jump to the reserve risk. Again, this measures hodler confidence in comparison to price. And we're flashing a buy signal there as well. If we go look at something like the Mayer multiple, which has been around for quite a while, that's the comparison of the price relative to the 200-day moving average.

Starting point is 00:07:48 Again, one of the lowest points in Bitcoin history and flashing a buy signal. And then, of course, Bitcoin approaching that 200-week moving average, currently sitting at $22,000. As we get closer and closer to that, it only means that more and more people are going to say Bitcoin may be valued at a point that is quite attractive. And so ultimately, if you're able to get the courage, conviction, and have the dry powder, you buy around these points. There's no guarantee of future performance, but it sure has in the past worked out pretty well. Next, I want to jump over and look at Dylan Leclerc. He had a great tweet where he pointed out the reserve risk is quantifying that HODL or conviction relative to price. We can see that deep buy signal flashing there as well.

Starting point is 00:08:30 And then lastly, Dylan had a great tweet where he basically summarized what's happening right now. Everyone wants to buy blood until it actually comes. This is part of what makes this current market so unique is that everybody prays for a lower Bitcoin price if they're trying to accumulate more and more. But now that it's here, there's tons of fear, uncertainty, and chaos in the market. You need to do your own research. You need to be aware of the risk. But as we've seen in chart after chart after chart and metric after metric, there are buy signals flashing all over the place.

Starting point is 00:09:01 I hope that you guys enjoyed these overviews, and we'll be back next week in studio. So until then, I'll see you guys on the internet. 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 pompscryptocourse.com.

Starting point is 00:09:24 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. Thank you.

The Pomp Podcast - #961 Why Did Bitcoin Crash Down To $25K This Week?

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