#665 Bitcoin Whales Are Buying Like CRAZY w/ Will Clemente

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.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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's 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. First up is AppSumo. AppSumo is the leading digital marketplace for entrepreneurs and a great way to get your product in front of one-plus million entrepreneurs, founders,

• 0:47Anthony Pompliano?

  and small businesses. AppSumo is giving away their entire $1 million Black Friday marketing budget to creators. If you have an ebook, an online course, a template, or any other digital product, this is for you. You can list your product on AppSumo between September 15th and 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 bucks, and everyone who lists gets entered to be one of the 10 lucky winners of $10,000. Go to appsumo.com/pomp to list your product today and cash in on this amazing deal. Again, appsumo.com/pomp, or you can click on the link in the description as well, appsumo.com/pomp.

• 1:29Anthony Pompliano?

  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. It makes it simple and secure to buy, sell, store, and earn Bitcoin Ether and over 40 other cryptocurrencies. They offer an industry-leading security, insurance, and uptime. Gemini is the go-to trusted platform for beginner and sophisticated investors alike. You can open a free account in under 3 minutes at gemini.com/pomp and get $20 of Bitcoin after you trade $100 or more within the first 30 days. Again, takes 3 minutes when you go to gemini.com/pomp and you'll get $20 US dollars of Bitcoin after you trade. $100 or more within 30 days.

• 2:13Anthony Pompliano?

  Gemini.com/pomp. What are you waiting for? 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, you can split $100 in Bitcoin with a friend when you invite them to sign up for OKCOIN. If they buy 100 bucks of crypto in the first month, you invite them, they buy $100 of crypto, you both split a free $100 from OKCOIN. The more friends who sign up and buy, the more Bitcoin 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.

• 2:58Anthony Pompliano?

  Now you can automate dollar cost averaging with completely fee-free daily, weekly, or monthly recurring buys on OKCOIN until November 1st. That's right, those automatic dollar cost averaging purchases 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/pomp. Again, OKCOIN.com/pomp. All right, let's get this episode with Will. I hope you guys enjoy this one.

• 3:32Speaker 01

  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.

• 3:55Anthony Pompliano?

  Let's jump into on-chain metrics. What you got for us this week?

• 3:59Speaker 02

  Sure, so this week I actually had our good friend Nick Batia featured. So it's a little shorter than usual because we actually like hit the limit on the newsletter for Substack. But so first off, we have our URPD chart that we like to, we like to look at pretty often. This is basically just on-chain volume. And so what you see Here is that we have like four pretty distinct clusters. Um, the first is like kind of the, the pre bull market cluster between like three K and call it uh 11 K. We have one while we were consolidating, you know, in that little mini bear market, whatever you want to call it uh between May and, and mid-July. Um, and that, that cluster is between 30 K and 40 K, obviously. Uh, we have the one we're currently in, which is between 44 K, 50 K.

• 4:45Speaker 02

  Uh, and then lastly, we have a smaller cluster above us. This is kind of like the last um zone of, of resistance, I would say. Uh, between 53 K and 60 K. Um, and so we actually got rejected last week off of um the, you know, the, the beginning portion of, of that upper cluster.

• 5:01Anthony Pompliano?

  And so on this right, on this right here, how should people think about these clusters? Like, what does that tell you when you look and identify them?

• 5:08Speaker 02

  One way to think about it is like, this is where um market participants kind of built up their cost basis, right? So like, you'll see that the gray line, um, the gray bar, that just means like that's where we are currently. Um, that, as you can see, like, that's the largest bar of volume since like, uh, like nine and a half K. Um, like all the way on the left-hand side of the chart. So that's just showing like, there's a lot of capital inflows at these price levels. There were also a lot of capital inflows between 30 and 40 K. Uh, and so to me, this is showing, you know, you can kind of identify like support resistance areas where people bought in, right? Because, you know, when we come back and re, when we retested, you know, the, the, this uh cluster on the right-hand side and we retested 53 K uh last week.

• 5:51Speaker 02

  You know, that, that's where a lot of people have bought in. So obviously there's going to be overhead supply. Uh, and this is like essentially like when you're mapping resistance levels, it's very similar to the premise for technical analysis, just saying like, there's people that bought in here. So once price gets back up to that level, like natural market psychology says, people are going to take profits that held all the way down. They're like, okay, well, I got it back up to my cost basis. I'm, I'm getting out of here. So, um, I don't think it's like super surprising to see some, some, you know, rejection off of that initial test of that. Um, but that's the way I think of it. It's just, this is kind of where capital. inflows came in at different levels.

• 6:26Anthony Pompliano?

  Got it. And then what about supply shock ratios? It looks like we're continuing the same trend?

• 6:30Speaker 02

  Yeah, it did seem real, just pretty much just continuation here. We're kind of started this next impulse, I guess you could call it. Um, as you'll see in the liquid supply shock ratio, um, this is essentially just tracking movement of coins from weak to strong hands. Uh, and this is defined as like entities based off of their spending behavior. Uh, and so liquid entities take in a lot of coins, don't move many out. Highly liquid and liquid entities are moving coins in and out all day long. Right? So you're tracking the movement of coins from, um, those, those entities that are moving coins in and out all day. To those, um, strong hands or long-term investors, however you want to think about that. Um, this is also like the metric that Pop, I remember back down in, in, uh, you know, like mid-May or early June, when we were talking about this bullish divergence and people were calling us crazy.

• 7:14Speaker 02

  Uh, but this was like one of the main metrics that we kind of used to call the reversal down there. Uh, and so as you'll see, we had like two impulses, one kind of right above where it says June 28th, one above, uh, July 26th. And then recently we've just got this, uh, third kind of impulse where we just, um, moved up actually yesterday as well, but, um, I'm watching to see if we yet follow through. Um, I'm suspecting that that'll probably play out over the next couple of weeks. Um, but also you're seeing, um, an uptick in the red line. It, it looks like it's smaller. It's just because, to be honest, I put it on the wrong scale, but it's, it's of the same magnitude as, as the blue one. Um, this is tracking the movement of coins from the highly liquid entities. So these are the people that are like really in and out of the, in and out of the market all day long. Right?

• 7:56Speaker 02

  A lot of this is probably market makers. Um, and then the movement of, of coins from those entities to what I consider more of like the short-term investors, right? These are people that are, um, that sell less than, uh, or sell more than 50% of the coins that they take in. Um, and highly liquid, by the way, is they, they sell over 75% of the coins they take in. Illiquid is less than 25%. Um, so you're seeing the movement of coins in this red line from those highly liquid entities to liquid. And then you want to see that translate into blue, right? So you want to see coins go from li- highly liquid to liquid and then move into a liquid. And so you are starting to see, um, what looks like some translation from.

• 8:34Speaker 02

  Um, the, the red, you know, seeing that uptick. And so what that's just saying is that the coins are moving from liquid, uh, I mean, I'm sorry, Jesus, from highly liquid to liquid, uh, to illiquid. So that that's a good sign. And then we have our purple line. Uh, this is the, um, exchange supply shock ratio. So what you're looking at here is, um, a lot of people get this misconstrued. This isn't the percentage of overall circulating supply on that, you know, is, is exchange balances.

• 9:01Speaker 02

  This is subtracting, um, exchange balances from circulating supply. So you're getting the amount of supply that aren't on exchanges and then you're running a ratio of that to the amount of coins that are on exchanges. So essentially similar to, um, our liquid supply shock ratio, right? Which is measuring weak to strong hands. Here you're measuring the amount of coins that are available to be bought on exchanges to the amount of coins that you can't buy. Uh, and so like seeing this uptick is basically just, uh, another way to look at the fact that coins are moving off exchanges. And the last week we have 26,000, uh, 150 roughly, it's 148, if you want to be exact, of coins that moved off exchanges totaling, uh, roughly 1.25 billion dollars at a 48,000 Bitcoin, uh, price. So

• 9:43Speaker 02

  you're starting to see continued coins move off exchanges. Coins are moving to these, uh, you know, longer term investors, which is of course a good sign. Uh, and I mean, this, this has been pretty much up only since, since kind of mid-May, right?

• 9:55Anthony Pompliano?

  So when you look at the whales, you take people who've got more than a thousand Bitcoin and you take out the exchanges, people that we know have the exchange wallets, uh, it looks like the whales are going absolute bonkers and buying Bitcoin right now, uh, and soaking up whatever they can buy.

• 10:10Speaker 02

  So if you look at this, I know in the, in the, uh, chart I put in there that you have up on the screen, it's kind of zoomed in, but if you go back to like mid-May, um, whales did a lot of the selling on the way down. Um, I think a lot of that is a whole side thing, but I think a lot of that had to do with like some arbitrage opportunities that closed, um, cause that kind of aligned with where we saw, um, the number of whales and whales holdings drop off. But yeah, since like mid, late Ju- uh, July, you started to see whales, uh, you know, pretty aggressively buying. Um, and as you mentioned, like what we're looking at here is all the entities. Um, so this is forensically clustered addresses, which are what entities. And then you're filtering out, as you said, exchanges and then also like grayscale, the purpose ETF,

• 10:50Speaker 02

  also QBTC. And so you're just basically getting the raw, you know, whale balance. And so what you see here is that since July 17th, which is two months ago, whales have added 184,699 BTC, which is roughly 8.8 billion dollars. Once again, using that $48,000 Bitcoin as the reference for that.

• 11:11Anthony Pompliano?

  When you look at the ASOL, remind everyone what ASOL ends up actually being and how you look at this? And then what is this chart telling us?

• 11:19Speaker 02

  What we're looking at here is we're trying to track the age of the coins that are moving. And so there's a couple of ways you can look at this. I just decided to throw an ASOL because I hadn't put that chart in the newsletter for a while. But you want to kind of use all these metrics in tandem. So for example, we have like our spent output age bands, our spent volume age bands, coin days destroyed, dormancy, liveliness. And each of these different metrics have a different purpose. So for example, like ASOL is just the average of all the spent outputs on a given day, but there's no weight given to it by volume. So, you know, if, if you have what appears to be high spending from older coins, you, you need to also look at the volume of which they're selling because if they're selling like

• 12:02Speaker 02

  .001 BTC, you know, who cares, right? But if you're seeing the volume of, of, and that's where you look at the spent volume age bands. And, and also you can look at like point days destroyed. You can see the volume of older coins is perhaps increasing or decreasing and then look at is, is that in correlation with like the, the ASOL or your spent output age bands, which are literally just looking at the average or the average in case of ASOL, but also spent output age bands. You're just looking at the amount of spent outputs on a given day. So, you know, nuance, nuance, nuance, yada, yada, yada. But it's just saying you need to use these different age related metrics in tandem.

• 12:42Speaker 02

  But overall, the conclusion here is just the fact that long-term holders are sitting tight, right? We're seeing declining in, in, in the age of the coins that are being spent on each, you know, on, on every given day over the last, call it week or so. And so you see that in tandem across, you know, across the board and all these age related spending metrics. And that's just the kind of point I was trying to get out here. So a lot of this. Spending is coming from these younger coins.

• 13:06Anthony Pompliano?

  When you look at the futures market, I know that there was a bunch of futures and derivatives that played into some of the price movements previously. What are you seeing right now in the futures market?

• 13:14Speaker 02

  You know, on-chain is obviously like it tracks broader trends, right? And so for these kind of short-term price fluctuations, obviously you need to watch a like short-term price structure, but also derivatives data. And so last week, we got a complete flush in the derivatives market. We had, you know, this massive, you know, liquidation cascade. Since then, we've started to see a recovery in funding and then also in futures open interest. So futures open interest has recovered by roughly a billion dollars from the wipeout, but it's still three billion dollars from where it was at before we had the sell-off last week. And then also funding is slightly recovered, but it's still pretty far from where we were at, you know, leading up to that cascade last week.

• 13:55Speaker 02

  So, you know, keeping an eye on some of the, on some of the stuff, like you can just watch basic, you know, just watch funding in futures, you know, open interest. And if you see like a large increase in both of those, you know, perhaps that's, that's the time to be a little more cautious in the short term, right? But, you know, I think like, and this, this kind of goes into the next chart, the broader on-chain structure, in my, in my opinion, like when looking at these supply dynamics, when you have things like, you know, supply that hasn't moved in at least a month, hitting, hitting an all-time high at 93% of supply hasn't moved in, you know, at least a month. You have long-term holders, supply hitting an all-time high. A lot of these things are just, in my opinion, undeniably bullish for the coming months.

• 14:36Speaker 02

  But perhaps, you know, on the, on the shorter-term timeframes, you know, you can get these liquidation-driven moves. Because, you know, the liquidity in the futures market is massive. So it has, it has a large impact on, on pricing in the short term.

• 14:50Anthony Pompliano?

  When you think about the current state that we're in, I think over the last couple of weeks, we've really talked about this kind of supply squeeze. It seems like about 90% of Bitcoin hasn't moved in the last 30 days or so. Only the earliest, youngest coins are being sold. The whales are buying up as much Bitcoin as they possibly can. Is this just a recreation of a lot of the market dynamics from October of 2020, which then was followed by like a 500% move? Do you see a?

• 15:18Speaker 03

  A lot of similarities between those two things.

• 15:20Speaker 02

  Yeah, for sure. Like, you know, I think like a lot of the metrics that like I'm looking at, they kind of resemble the end of like a bear market almost. And so like my kind of like framework for the current like where we are right now is kind of that we're transitioning out of like the latter half of like a bear phase for the market. But you know, like zooming out, it kind of appears some things are, you know, saying that we're kind of in like the middle of a bull market. So I guess the way I would frame it is that we just came out of a mini bear phase within a broader bull market structure. But a lot of the things when you're talking about the supply dynamics, as you just mentioned, are in fact like resembling kind of mid to late, you know, 2020.

• 16:01Speaker 03

  I like that. Joe, John, what questions you guys got? What's going on, Will? Appreciate you coming, man. I got a quick one about hash rate. So we saw it fell about 50 to 55% earlier this year with everything going on. It's recovered aggressively since then. We're probably about halfway back. So maybe 20 to 30% down from its all time highs. But how do you think about Bitcoin's hash rate in terms of future price?

• 16:23Speaker 02

  I guess the way I would think about it is just, you know, as, as more hash comes on the network, like miner profitability goes down, right? Like when hash first came off the network, like North American miners were super profitable because there was less competition for the same amount of block reward, right? And so as hash has come back on the network, that profitability has, not in a big way, but it's, it's started to get more constrained, right? As you start to see it recover. And so I would suspect like you're going to see some, some, you know, like marginal selling from these miners, perhaps as, as they need to cover their cap, capex. But like, at the same time,

• 17:02Speaker 02

  you know, now they have, you know, so much access to the capital markets, they can just raise capital to, you know, cover their, their operational costs. So it's, it's, I don't know, it's hard to say because part of me thinks they're going to have to sell some of their BTC and miners have been selling over the last, call it two weeks because, you know, their profit, their profitability is getting a bit constrained as hash continues to come back on the network. But at the same time, we know like miners now can just borrow, you know, as much capital as they need and they can tap into the capital markets that way. So I don't know, man, like it's, it's hard to say. I, I, those are kind of like my two arguments though, for and against. If it has a positive or negative effect.

• 17:37Speaker 04

  John. Yeah, well, what's up? Thank you for doing this. We all know you're big time now, so. So I have, I have two questions. One, can you just talk about kind of the resistance that Bitcoin has? I read the other day that people were kind of calling the resistance at forty six thousand. And then also, can you talk about, so from February to May of this year, it apparently seemed that a lot of whales were kind of building short positions and distributing their long positions to push out retail traders. Can you talk about that? And if we're seeing what we saw in February, kind of now?

• 18:06Speaker 02

  Sure. So like, I think on a short term basis, I kind of look at like, these levels are created by a guy on Twitter called Spaceman BTC, so shout out to him. But it's looking at like the weekly high, monthly high, daily open, monthly open, you know, these like shorter term key levels, right? And so we've broken out above the Monday's high and also the monthly open. And then we come back down and now we're retesting the monthly open. So if we can, if we can move back off of, you know, this retest of the monthly open right now, I'm kind of looking at a move up towards the previous monthly high, which is around fifty fifty five K.

• 18:46Speaker 02

  And we're also above the two hundred day, which is another, you know, kind of like key level that I think a lot of like legacy finance is probably watching. But the key level from like a technical perspective for me is watching this point of breakdown, which we broke down out of in May. And so that's, you know, right around forty forty nine K, call it. Because for me, like, that's important because you're showing, you know, price, the market has now decided that it's moving above where it decisively moved, you know, down into this mini bear phase in, you know, like in mid May. So if we can get back above, call it fifty K, which is also just a psychological number, that would also mean we're getting above the previous monthly high and also the point of breakdown.

• 19:29Speaker 02

  And so if we can move back above that level, that would be a really strong sign for me. But in the, in the short term, like, I'm watching this retest of the monthly open, see how we react. But I feel pretty confident here also, you know, obviously from on-chain perspective, but, you know, seeing that we're now sitting. Above the 200 A and just broke above Monday's high and also, you know, we did break above the monthly open. But as I just said, we're now retesting it. But yeah, what was the, what was the second question?

• 19:56Speaker 04

  No, you're good. Um, does it look like, does this look similar to what we saw in February? So someone mentioned in the chat about how maybe some whales are building like shorter positions and distributing their long positions to push out retail traders. I'm curious what you think about that.

• 20:09Speaker 02

  It's hard to say, like, one interesting thing I have been watching though is like Biffin X. Like I've watched sometimes like the heat maps of like the bids and asks. And it's interesting, like, it seems like the Biffin X, the large Biffin X buyers almost always get their, their bids filled. So that that's been one interesting thing. And like, whenever their bids get filled, you also see like an uptick in on chain, like, you know, the whales holdings as well. But I don't know, it's, it's hard to like, say if they're, if they're like moving the market or not. But I, I guess the only, the only thing I would say is just that seems like whales are kind of getting their spots picked pretty well and they're, they are getting their bids filled. So I don't know.

• 20:50Speaker 02

  I, I think it's like hard to, it's hard to make that conclusion, but, um, you know, I definitely don't think that, um, you know, it's anything against that argument that, that I've been seeing.

• 21:00Anthony Pompliano?

  Well, last, uh, last question, I'll let you go. Prediction changing for end of year? Are we still, still on track for a big blow off, uh, top here?

• 21:09Speaker 02

  No, prediction hasn't changed. I don't know about blow off top though. But I, I think perhaps like this run stretches out into like Q1 of next year. But yeah, like I think the supply dynamics though, from like a macro perspective are setting up for a really strong next couple of months. Um, obviously it, it depends on if we get some catalysts with, you know, some announcements or, you know, and there's been a bunch of chatter about this supposed ETF announcement coming out, which I'm not an expert on any of that stuff. So we'll, we'll see how that goes. But from just like the pure supply dynamics standpoint, I think, yeah, we're, we're setting up for a, uh, an exciting next couple of months.

• 21:46Anthony Pompliano?

  Awesome, man. Don't have too much fun this weekend. We appreciate you.

• 21:49Speaker 02

  Thanks, man. You guys take it easy.

• 21:51Anthony Pompliano?

  Thanks, everybody.

• 21:52Speaker 02

  Bye, guys.