#568 Is The Bitcoin Sell-Off Over?? w/ Will Clemente

Will Clemente is a Finance Major at East Carolina University. He has quickly become one of my favorite writers on all things bitcoin, including deep dives on various on-chain analytics. Subscribe to Will’s new email newsletter here: https://btcbywc3.substack.com/ In this conversation, we discuss this week’s price sell-off, on-chain metrics, who is selling and who is buying, and much more. ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Remote makes it easy for companies of all sizes to employ global teams. We take care of international payroll, benefits, taxes, and local compliance, so you can focus on growing your business. Sign up for Remote today and receive 50% off your first employee for the first three months. Check out remote.com/pomp and enter promo code POMP to get started. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

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 a finance major at East Carolina University. He has quickly become one of my favorite writers on all things Bitcoin, including deep dives on various on-chain analytics. You can subscribe to Will's new email newsletter in the link in the description. In this conversation, we discuss this week's price sell-off, on-chain metrics, who is selling, who is buying, and much, much more. I really enjoyed this conversation with Will, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is L-Max Digital. This is a new sponsor,

• 0:47Anthony Pompliano?

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• 1:28Anthony Pompliano?

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• 2:14Anthony Pompliano?

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• 2:58Anthony Pompliano?

  You can sign up, make three card transactions, and you'll get $15 for free. That's right, 15 bucks. What can you do with the $15? You can exchange it for Bitcoin or any of the other tokens Revolut supports. Yep, they are crypto-enabled. These guys have made it easier to get some skin in the game. And as usual, when you move your money from fiat to crypto, your capital is at risk. So sign up now through revolut.com/pomp to get a $15 reward and put them to the test. Again, revolut.com/pomp to get a $15 reward and check out Revolut. Revolut has come to the United States in a big way. If you're a retail investor, go check it out. Make sure you check out Remote. And if you're an institutional investor looking to get better trading execution,

• 3:43Anthony Pompliano?

  go check out LMAX Digital. All right, let's get into this episode. Will, I hope you enjoy this one.

• 3:48Speaker 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.

• 4:16Anthony Pompliano?

  Alright guys, bang bang, I'm here with Will. We're gonna break down this on-chain metrics. How you doing, man?

• 4:22Speaker 02

  I'm good, Paul. How about yourself?

• 4:24Anthony Pompliano?

  I'm doing alright. Let's just jump right into it. It seems like after two weeks ago, when price was going absolute crazy, felt like it was just dropping and there was no floor. Now, all of a sudden, we get in a situation where there's a little bit of relief and Bitcoin has come back. So maybe just give us a quick overview. Like, what did you see in those on-chain metrics this week?

• 4:44Speaker 02

  Yeah, sure. So I guess we can just kind of roll through, you know, give kind of a high-level overview of the newsletter we put out this morning. So, you know, I think some key takeaways from the, you know, what we put out this morning and just kind of the general trends through the week are, you know, first of all, there's the, you know, a clear rotation from short-term holders to long-term holders,

• 5:07Speaker 02

  which is interesting, especially in comparison to trends in previous cycles, which we'll get into. Exchange flows have kind of reversed. Last week, we were talking about how

• 5:20Speaker 02

  we had seen a lot of coins moving on to exchanges before, you know, Wednesday's dump. But I think now we're starting to see, you know, nothing crazy, but those coins, we're now seeing net outflows from exchanges, which is showing we're in somewhat of accumulation. And then also, we're seeing new entities coming onto the network,

• 5:43Speaker 02

  which we had been trending down and new entities coming onto the network for perhaps the last month or so. So seeing that in the last week, last two weeks, is really showing that new entities are probably getting attracted by lower prices. And then the last thing, miners are not accumulating as heavy as they had been. I think for the entire time that we've been doing this, we've consistently been talking about how miners are accumulating more and more, but we've actually kind of seen a plateau in that behavior. So for some like kind of short term, you know, support resistance zones, I think one

• 6:21Speaker 02

  big one above us is the 200 day moving average, which is around like 40,000, 750, 41,000. And then also 50,000, obviously, and then 53K, and then obviously 59 to 60K. And those are, I think, kind of confluent between technical supports and on-chain supports based off of, based off of volume. And then to the downside, I think, you know, 30K, obviously, but then if we lost 30K, I don't see a lot of support between 30K and 20K. And so those are the two main zones that I'm looking to the downside, but we're really just kind of chopping in this range.

• 7:00Anthony Pompliano?

  Got it. Let's talk a little bit about these accumulation addresses. I think a lot of people don't actually know what those are and then what they've been doing over the last week or so. So maybe just start with like, what is an accumulation address?

• 7:12Speaker 02

  Yeah, so accumulation addresses are addresses that have received at least two funds, I mean, at least two transactions inbound. So I think Glassno does that because by, by using two instead of one inbound transactions, it kind of eliminates like one, one-time use addresses, right? So it's people basically that are buying Bitcoin, moving, moving more BTC into the address, but aren't moving any out. And so there's that, but then there's also the balance of those addresses. So I think you need to look at both of those things because, you know, those accumulation addresses might be going up, but the balance in the accumulation addresses might be sideways

• 7:55Speaker 02

  or it might be down, which is showing it's, it's more retail coming on versus if you see the, the balance in the, in the addresses really having a strong leg up in, in confluence with the accumulation addresses going up, then I think that shows that there's some larger entities. But, you know, in the last seven days, we've seen about seven, let's see, I have down 7,430 new addresses in the last seven days. So it's looking like there, there's some new, you know, at, at least in the short to midterm kind of people that, that are, you know, scooping up these coins at these levels. They aren't necessarily swing trading, but you know, they're just, they're just kind of accumulating.

• 8:35Speaker 02

  Perhaps maybe they're, they're just looking to, you know, capture a bounce up into 50ks, but they're not, they're not selling very short term. Um, and, and then, you know, over time, we'll see if some of these accumulation addresses become long-term holders. Uh, but for now, yeah, they're, they're not selling. Um, the accumulation and like the, the addresses all together, they've, they've added forty seven thousand, uh, two hundred seventy new coins to, to their holdings. So, um, I, I think that, that, that's healthy to see, like we were just saying, the, the balance go up in, in confluence, um, with the addresses.

• 9:09Anthony Pompliano?

  Got it. And so it feels like in, in some way, you've got one, these accumulation addresses, lots of those now being able to be identified on chain. And then most of the coins that are being sold are between like one day old and, uh, one month old or one week old. And so this seems to be more traders that are actually, anyone who is selling is more of a trader.

• 9:31Speaker 02

  Yeah, um, I, you're seeing a lot of selling from, you know, more than usual from, uh, coins under twenty four hours. Um, you know, the, these are coins that are being moved in and out and it's, you know, really just, just traders moving in and out of the market. So I think seeing this, seeing this spike in, in the younger cohort selling, I think this is kind of showing that traders aren't really, um, confident at these price levels in either direction. Cause we've really just been trading in this call it, you know, thirty two, thirty three K, um, and you know, forty K at the top of the range. We've just been trading in that little channel, um, since, since the crash.

• 10:09Speaker 02

  So I, I think it, it's just showing that a lot of these guys are just kind of swing trading, buying it, buying it, you know, at the support at the bottom and then trimming at resistance. And I think, you know, I've, I've talked to a couple traders over the last few days. I had this guy on one of my, I do the Twitter spaces and, um, his, his name's Crypto Cred. Um, but he, he's really good with the TA and he was saying, yeah, I'm, I'm, you know, myself and, and other people that, um, I know that are technical traders. We're just waiting for, uh, confirmation to the upside. We're not gonna, you know, try to, try to. They're okay with giving up some of the upside in in return for being confident in their entry. So I think right right now, people are kind of hesitant to to go long.

• 10:52Speaker 02

  Or or, you know, short for that matter, I think people are just waiting for the market to kind of make a decision. And then like the futures open interest is is pretty flat, too. So I think that's showing people are kind of hesitant to jump back into the market after, you know, last week.

• 11:06Anthony Pompliano?

  Got it. And so it does seem like while the traders don't really know should they be long or short. And they're kind of doing more of the the short term optimization. Long term holders seem to be drastically still accumulating, right? People who don't care about short term price movement seem to be unmoved by any of this price volatility. And they're actually taking the opportunity to buy more.

• 11:25Speaker 02

  Yeah, and and, you know, I think it's really interesting because at the same time, we have we have the long term holders that have been adding to their, you know, holdings over the last seven days. And then when you look, you know, it's it's almost like inversely correlated. The the the short term holders have been trending down. So you get this and, you know, I don't know if this is a really good thing because obviously you you want to continually, you know, have coins move to people who aren't going to sell. But I I think it would be nice to see some some new market participants come in and stay. I don't think I don't think that's a that's a great thing.

• 12:04Speaker 02

  Obviously, in in terms of, you know, building up that that base of of coins in terms of price. But just in terms of adoption, I think it it would be better to see new, you know, new entities come on. But I mean, that's not that's not the end of the world. But I think what what's interesting is, you know, when when we get to the previous, like at the top of cycles, you start to see, you know, retail really overtake a lot of the movement in in, you know, in and out of exchanges and and volume and things like that. And and they start to take up a larger portion of supply.

• 12:41Speaker 02

  And at the same time, you see the longer term holders sell off. And then in the bear market, you see the opposite. All the short term speculators move out because Bitcoin went down eighty percent. And you know, when we get to the bottom of the bear, that's that's peak when when long term holders are accumulating because they've been through multiple cycles. So I think it's interesting right now that you're seeing, and and this is one thing that if if I had to look at something that was that looked like a top, it would be this because you're starting to see the long term holders take up a larger portion of supply again, while short term holders are are trending down, meaning, you know, they're they're selling, where, you know, in in previous cycles, it it's

• 13:24Speaker 02

  almost like these lines had had crossed where where, you know, short term holders really ramp up their holdings and long term holders begin to kind of sell into the strength, you know, mid to into the later phases of the bull market. So that's something I'm keeping my eye on because that's not something that's happened in in previous cycles, where midway through the cycle, you've seen the short term speculators step out while the long term holders are, you know, coming in and scooping up those coins. But for, you know, this prolonged of a period of time, I just think that's interesting.

• 13:55Anthony Pompliano?

  What do you think the ramifications of that would be? Does that signal maybe potentially a bigger bull market, a longer bull market, maybe not a crash, you know, at some point in the future, or we don't know yet?

• 14:07Speaker 02

  Yeah, um, I I think it it's showing that we're we're building this this stronger base up. Obviously, you know, it's not great for the adoption, like I said, but I in terms of the coins, you know, being locked up and and building up this floor, I think that this is good in in that sense. So yeah, I think if if this, you know, if this continues and and coins continually are moving to

• 14:35Speaker 02

  These these long term holders, perhaps we're we're in this, you know, strong accumulation zone, but it's just a question of can, well, you know, if if if that were the case, how, you know, how long are they able to kind of hold the floor while while new sellers are are moving out and and you know, what's the offset between the those two forces? But I I think it's I think it's kind of neutral. I just, I think if you if you see continued accumulation by long term holders and this trend continues now, where I'm seeing this this reversal where where the short term holders are are selling off and long term holders are continuing to add, I think perhaps the the structure of the like the underlying

• 15:18Speaker 02

  forces behind the cycle are are perhaps different than previous ones.

• 15:23Anthony Pompliano?

  Got it. And so what else are you seeing on the on chain metrics? There's some stuff around like entity growth that you wrote about?

• 15:29Speaker 02

  Yeah, so Glassnode has this metric called net entities growth, and you could basically just think it of it as like net user growth on the network. So Glassnode kind of, you know, forensically clusters different addresses into what they believe looks like a a certain entity. So entity can be a person, a corporate treasury, an investment fund. Well, it just looks like one, one, one group or or one, you know, and I don't know another synonym for entity, but I think that's pretty straightforward, honestly. But they they subtract the new the new entities coming on the network from entities that have no balance and and they

• 16:11Speaker 02

  they look dormant. So there's no action coming from them for a prolonged period of time. And then also, they have no no BTC. So they subtract that difference, and then you get net entities growth. We that had actually been trending down over the past, call it month or so. But but now, over the last week and a half, two weeks, you've seen a new leg up in that. So it's overall, it still looks like it's it's in a downtrend, but we have seen like this really sharp, almost V shaped recovery in in the new entities coming on the network. So perhaps this is retail, because retail, retail, the the smaller entities,

• 16:54Speaker 02

  call it like point zero zero one to one BTC, those are trending up in in terms of how much supply they're holding. And then also, the number of whales is trending down. So to say that the new entities are, you know, you're seeing this leg up in new entities while there's a move down in the number of new whales coming onto the network. To me, that shows that it's, you know, retail or holders with smaller amounts.

• 17:22Anthony Pompliano?

  Got it. And then talk a little bit in terms of the idea of selling at a loss on aggregate versus actually coming back to break even as people offload some of these Bitcoin.

• 17:33Speaker 02

  Yeah, so this is a metric called SOPER. It's something that we've touched on in previous pods. It's basically the aggregate profit loss of the market on any given day. When you see the market at a loss on aggregate, it's something that's not so common in a bull market because people aren't going to be willing to sell at a loss when, you know, when Bitcoin is going parabolic. But whenever we do see these dips into, you know, where the market's selling at a loss, it usually doesn't stay down there for a long period of time. And we're actually seeing a pretty sharp recovery in that where the market's now back in net profit, no longer

• 18:13Speaker 02

  in net loss. So I think that that's kind of showing this rebound in whoever was going to kind of capitulate because, you know, what we had last Wednesday was really a capitulation and then a liquidation. So I think whoever was going to capitulate, it appears that they've already done so.

• 18:34Anthony Pompliano?

  Got it. And then what about kind of miners? What were they doing this week?

• 18:40Speaker 02

  Yeah, so, you know, for a while, we had been talking about how the miners were stacking really hard and they just kept adding to their positions over the last, you know, month and a half. But what I've seen on chain in the last, call it, you know, 10 days or so is You know, this plateau in miners accumulating, so Glassnode looks at, you know, all the miner balances. They have a metric called miner unspent supply. And so, you know, right around May 10th, it kind of topped out. And since then, we've just kind of been going sideways, which is, I guess, I guess, market neutral because, you know, they're not, they're not accumulating as heavily as they had been, but they're not dumping necessarily either.

• 19:23Speaker 02

  But, you know, I have seen a lot of selling coming from Chinese miners, which is interesting because I heard some talks about, you know, the CCP cracking down on different mining pools. And then also something about the wet season and they have to move their, you know, their machines to, you know, a different location.

• 19:46Speaker 02

  I might be misquoted on that, but it definitely is showing a lot of selling coming from these Chinese miners. Particularly one is Pulin, which I looked up was the second largest Chinese pool for miners. So I think that's interesting. It definitely contributed a little bit to some of the selling last Wednesday. There's a big spike in coins moved to exchanges from Pulin. But I'm seeing this trend in selling from Chinese miners over the last week.

• 20:19Anthony Pompliano?

  Got it. And then what about the actual Bitcoin on the exchanges? It seems like that was a little bearish last week, but may have flipped this week.

• 20:30Speaker 02

  Yeah, you know, I think for the entire cycle, there had been this narrative kind of driving, you know, at least from the data side that, you know, the coins are being moved off the exchanges. And then they're moving into deep cold storage, never to resurface again. But, you know, over the last month or so, we've really started to see these coins come back on exchanges in a big way.

• 20:54Speaker 02

  Especially leading up to last Wednesday, we saw a lot of coins moving on to exchanges, um, which was kind of this early sign that perhaps we were getting ready for this dump, especially in, in the hours leading up to, uh, you know, call it Tuesday, Wednesday. Um, but you know, af- after, after Wednesday, we're starting to see that kind of reverse. So, um, I, I think we kind of touched this at the beginning, but you know, they're not necessarily super bullish, like we're not seeing these massive amounts of coins coming off exchanges, but they're no longer, um, net inflows to exchanges. So it is showing that people are, are taking coins off at, at a, a bigger rate than, than the people are moving coins on to exchanges.

• 21:36Speaker 02

  So I think, you know, that's just showing some accumulation, but it, it doesn't look like there's any, um, crazy capitulation coming, um, you know, in, in the short term, just based off of that, because it seems like people are now accumulating again slowly.

• 21:49Anthony Pompliano?

  Got it. And so would it be fair to say that kind of in summary, uh, you know, two weeks ago, things were, uh, a little bit more uncertain than they are now. Definitely there was a lot more selling, some capitulation. This week, it seems like while we're not completely out of the woods, uh, things are more positive, looking like there's been some relief or recovery. Um, and ultimately, uh, the bull market is still intact and it's got a lot more room to run.

• 22:15Speaker 02

  Yeah, I think, um, we're in this interesting zone here where, you know, it, it, the short term price action is, is definitely could go either way. Um, but it, yeah, I think it's, it's starting to show some, some promising signs, um, especially after Wednesday. Um, we're, we're, we're definitely seeing at, at least this kind of relief bounce here. Um, but I, I still remain bullish for the longer term cycle, I think. Um, you know, uh, uh, this is just kind of a, this big consolidation, um, and this, this big shakeout that I, I still see is going higher based off of kind of the, the broader metrics. But, uh, yeah, I think. You know, in the short term, I remain kind of optimistic but skeptical, I guess you could say,

• 22:58Speaker 02

  where it's starting to look like things are turning around, but you know, it's not screaming like this thing is about to, you know, explode. So I think in the short term, it's just kind of a market where you just kind of sit back and watch and let the market tell you more.

• 23:15Anthony Pompliano?

  Absolutely. And then before I let you go, tell us a little bit about how the email is going. You recently launched it. It seems like it's growing pretty quickly. But just remind everyone about that email that you send out a couple of times a week.

• 23:28Speaker 02

  Yeah, man. So you know, every Friday, I send out the newsletter on Pomp Substack, but then on Monday and then sometimes on Wednesdays, if needed, I send out a newsletter on my Substack, which is a BTC by WC3.substack.com. I think we're now up to almost 16,000 subscribers, which has been super awesome. You guys have been, you know, super supportive. I appreciate it. But if anybody's not sub to the newsletter, go ahead and do that. I really appreciate it.

• 23:57Anthony Pompliano?

  Awesome. Well, listen, I'm enjoying this. I'm learning a ton. I think a lot of people are really enjoying these videos. So thank you so much for doing this and just keep us updated on what's going on on chain and we'll do it again next Saturday.

• 24:10Speaker 02

  Thanks a lot, Pomp. Take it easy, man.