#574 Will Bitcoin Break Out Of The Accumulation Phase?! 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 onchain analytics. Subscribe to Will’s new email newsletter here: https://btcbywc3.substack.com/ In this conversation, we discuss this week’s sideways movement, 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. ======================= With over $1B AUM, Amber Group is a world-leading crypto finance platform helping institutions and individual investors to buy and sell cryptocurrency, earn yield, manage risk and access liquidity. Amber App new users only - earn 16% APR on BTC, ETH and USD stablecoins! Click here to sign up now. ======================= 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's 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 sideways movement, the on-chain metrics, who's selling and who is buying, and much, much more. I really enjoy these weekly conversations with Will, and I hope you enjoy this one as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Revolut. I've partnered with Revolut, which is a finance app in the United States and the UK, because they say they're the

• 0:47Anthony Pompliano?

  simplest way to access crypto. They're putting their money where their mouth is, too. You can sign up and make three card transactions and get $15. That's right, $15. What can you do with the $15? You can exchange 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. As usual, when you move your money from fiat to crypto, your capital is at risk. Sign up now through revolut.com/pomp to get a $15 reward and put them to the test. Again, revolut.com/pomp and you get that reward, and then let me know what you think about them. Next up are my friends over at LMAX. LMAX Digital is the number one institutional crypto exchange. They offer clients the deepest pool of crypto liquidity on the planet, and

• 1:32Anthony Pompliano?

  it's underscored by 100% uptime track record through volatility spikes. Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They are featuring a central limit order book, streaming spot Bitcoin, Ether, Litecoin, and Bitcoin Cash, all paired with the US Dollar, Euro, and Yen. Just cross-connect at Equinex LD4 or over the internet to execute your crypto trading strategy with precision. LMAX Digital, one of the most important companies in crypto and the number one institutional crypto exchange. LMAX Digital, secure, liquid, and trusted. More at lmaxdigital.com/pomp. Again, lmaxdigital.com/pomp.

• 2:16Anthony Pompliano?

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• 2:58Anthony Pompliano?

  earn interest on your own terms and do more with your crypto. Go click on the link in the description and check out Amber Group today. Again, click on that link in the description and go check them out. Let me know what you think. All right, let's get into this episode with Will. I hope you enjoy this one.

• 3:13Speaker 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.

• 3:41Anthony Pompliano?

  All right, guys. Bang, bang. I've got Will here with me. Thanks so much. How are you doing, man?

• 3:46Speaker 02

  Doing well. How's yourself, Pomp? How's Miami going?

• 3:49Anthony Pompliano?

  I'm doing all right. Great way to start off a Saturday morning. A little on-chain metrics. Let's just jump right in for the week. It seems like we basically are just trading between like $32,000 and $40,000 in this like range bound. Explain a little bit kind of how you see where we are right now.

• 4:06Speaker 02

  Yeah, so you know, when you're just looking at just the order books, I mean, there's a lot of buy orders set between, you know, like 32 to 30K and there's a lot of buy orders set between, you know, 40 to 42 in that range. So just looking at that alone, we're going to need a lot of volume to kind of break out in either direction. And until then, we're just kind of range bound. So, you know, we're kind of in this, in this zone where it's almost like no man's land where no one wants to take, you know, a directional trade in either, in either way, because people are just waiting to see, you know, kind of, kind of what the market is saying. We've had relatively low volume now heading into the weekend. Weekends are always lower volume than, than weekdays. So

• 4:51Speaker 02

  it'll be interesting to see perhaps if we have any moves with, with low liquidity. But yeah, for now, I mean, we're, we're just pretty much range bound, range bound. And it's one of those things where, you know, in my, in my humble opinion, this isn't where you kind of, you know, take any trades, you just, you just kind of sit it out, maybe trade the range, maybe, you know, pick up some at the bottom of the range and then, and then take some off at the top. Aside from that, I think you're, you're just waiting for like confirmation in either direction.

• 5:19Anthony Pompliano?

  And what, talk a little about the futures open interest. That's super interesting that, uh, that you kind of called out that it's pretty flat.

• 5:26Speaker 02

  Yeah. So, um, after we had that big, you know, liquidation event, whatever it was like two, three weeks ago now, um, yeah, the futures open interest is pretty much just completely flat. Um, we've seen it come back a little bit, but not, not substantial at all. Uh, and then the, the futures contracts, like I, you can go in and, and see, you know, the number of contracts that have been opened. And since we had that drop, I mean, it's pretty much just dead. Um, for anybody that, that has, uh, is subscribed to the newsletter, uh, if, if you look on that, that first picture that's up there, that bottom part of the, of the chart, that, that's the futures, uh, contract. So you can see after we had that big liquidation event, I mean, no one, no one wants to step in here. People are just waiting to see what the market's telling them at this point.

• 6:09Anthony Pompliano?

  Yeah. And it also feels like, uh, I know you've called out the dry powder and stable coins and like, there's just a bunch of stable coins that are just sitting there. Uh, I'm assuming waiting until people know, you know, which direction to take. Um, but what are you seeing on the stablecoin, uh, dry powder?

• 6:25Speaker 02

  Yeah, so Glasson has this metric called stablecoin supply ratio and all it does is it takes a ratio of the stablecoin market cap to Bitcoin's market cap. And so the way you can kind of think of this is when the when the metric goes down, there's more stablecoins in in relation to Bitcoins, right? So seeing this metric really take a dive down in the last two weeks, I think says twofold. First of all, obviously Bitcoin's market cap has gone down a little bit, but also the fact that there's a lot of stablecoins. And I think that that kind of illustrates that, you know, there's money sitting on the sidelines, similar to what we were just saying, that that's kind of waiting to see, you know, a directional trend in the market.

• 7:09Speaker 02

  So I've heard from a couple of people that kind of deal with institutional investors that, you know, they're looking to get lower bids filled, you know, perhaps in, you know, the 20s, right? But if they see that confirmation to the upside, you know, if we have a solid break into, you know, the upper 40s,

• 7:29Speaker 02

  you know, then they're then they're more willing to step in, you know, once they see the momentum that that is going back to the upside. But I think for now, people are just kind of playing chicken and you see that. And that not only the futures contracts, but also the stablecoins. It just seems like people are just waiting it out on the sidelines for now.

• 7:47Anthony Pompliano?

  Yeah, and you have this chart where there's these like clusters of price distribution and kind of where a lot of volume trades. And I know that you've called out previously between 53,000 and $59,000 serves a ton. And then also previously between 7,000 and $11,000. But it feels like you're seeing a third one form here, kind of in this this range. So talk a little bit about those price clusters and how people should think about what that really means.

• 8:16Speaker 02

  Yeah, for sure. So this metric is, it's called a UTXO Realized Price Distribution. And it's just this kind of fancy term for, you're looking at this this profile, if you were to flip the chart vertically instead of horizontally, you're basically looking at a volume profile of the on-chain, of the on-chain volume, not, not exchange volume, but on-chain. So, yeah, like you were saying, we had this big kind of distribution zone between 53, 59K. And, you know, that was why, one of the reasons why I was, you know, pretty bullish when we were in that zone, because it looked like a really strong zone of support.

• 8:57Speaker 02

  We had 10, 10 and a half percent of, of supply had moved above, between 53 and 59K. But yeah, once, once we lost that 53K mark, I mean, it was, it was pretty much straight down from there. And then we had another kind of big support at 47, dropped from there. And then now we've kind of found this, this range in, call it, you know, once again, 32 to roughly 40K is what the, the on-chain transaction volume is saying as well. So. In, in this zone, we've had about 10, 10 and a quarter percent of supply exchange, which is, yeah, when, when you, for anybody that subscribes to the newsletter, and I'm, I'm sure that we'll, we'll throw in the charts in as well for this video.

• 9:42Speaker 02

  But you'll see these three very distinct clusters. So you have that one between 53, 59K. This one between 32, 40K. And then you also have one from earlier on in, in the bull market where, you know, perhaps some wouldn't even consider this the bull market, but between, between 7 and 11K, like you were saying. So that, that's about 19% of supply. And that's like a huge supports down there. I don't, I don't see it's going that low. But if, if we were to lose, you know, just to, you know, kind of stay neutral, if we were to lose the, the 32K, you know, we kind of have a little bit of support in like 26. And then you're looking at some perhaps in around 20.

• 10:25Speaker 02

  And then one last big support at at twenty K. So I would, if we were to break down out of this range, uh, I would be looking for for those, especially uh, twenty K, I think is uh, I'm not saying it necessarily would get that low if we broke that, you know, broke down, but uh, that that's a really strong support zone there um, with the on-chain volume. And then also I know um, you know, that that's a big uh, technical support as well, where you know, obviously that was the previous all-time high. So uh, that that'll be a spot that a lot of people are looking to buy as well.

• 10:58Anthony Pompliano?

  Got it. And then in terms of where the selling's coming from, it feels like it's just all new coins, right? I know you've called out in the uh, analysis, kind of the one to three-month-old coins, and also three to six months. So what's going on there?

• 11:11Speaker 02

  Yeah. So you know, because of, you know, the Bitcoins Open Ledger, we can track all the the different uh, cohorts, ages of the coins. You can see, you know, when when coins move and then when the when coins move out of a wallet, they're considered spent. So just looking at, you know, the different cohorts of coins by age, um, you you, like you said, we're seeing a lot of uh, selling between that that one to three month and three to six month. Um, so perhaps, you know, these are funds that may be accumulated in, you know, the the ten to twenty K band last year, uh, at the end of last year. And then also, you know,

• 11:48Speaker 02

  in that upper, you know, fifty to sixty K range. Uh, and those coins, of course, are are selling at a loss. But uh, I think, you know, one one thing to take away is that it's a lot of the selling is coming from uh, newer market participants rather than people that have been in this market for a long time. Uh, and and you can see that through this metric called dormancy, which basically you just uh, look looks at the amount of um, it it it's not necessarily an average of the of the coins of of the age of the coins is a different metric, but this is looking at something called coin days destroyed. Um, so if you if you have a coin in in a wallet for one day, it has one coin day. And then once it moves, it has one coin day destroyed.

• 12:30Speaker 02

  Or if it's in a wallet for ten days and then it moves out of the wallet, it then has ten coin days destroyed. So this is looking at a ratio of that to the on-chain volume. And so you can kind of get this clear signal where trending down since you call it, you know, January, it's been younger and younger coins selling, which I think is an is a important trend to see where, you know, at the tops historically, it's been younger coins selling kind of towards the middle to beginning of the bull market. And then, you know, the older coins are coming in. I'm sorry, the older coins are being sold into strength, you know, towards the end

• 13:15Speaker 02

  of the bull market. So I think the fact that we're not seeing a lot of the older coins selling, I think is some signal because these are the people that have been in the market the longest. So I think, you know, they're the ones, they're kind of the smart money in the space. If you, you know, if we start to see these older cohorts, you know, three to five years, five to seven years, 10 years plus, if you start to see those people selling significantly, I think that's, you know, something to kind of raise an eyebrow to.

• 13:47Anthony Pompliano?

  Yeah. And then what about realized losses as kind of as people sell?

• 13:52Speaker 02

  Yeah. So realized losses is just, you know, if you bought a coin at a higher price, sell it at a lower price, you've realized the loss. You know, if you bought it at a higher price and you're still holding, then it's unrealized. So, you know, this is just saying people are selling at a loss and they have been since that big capitulation event. And this is trending down though, which is a good thing. So it looks like, you know, these coins are, the weak hands are almost done selling off. And, you know, we're getting close to a bottom out and realized losses. But very similar, Soper, which is.

• 14:31Speaker 02

  Similar to that, instead of looking at the raw number of the losses, it's taking a ratio of the profit to loss of the coins throughout the day. And we're getting close to broke even, breaking even on that. There's this, for anybody in the newsletter, you'll see this black line go across kind of the middle of the screen. And that's kind of the threshold for breaking even, which is one, a ratio of one. And we're kind of right on that, right on that line. So that's something I'd be looking, looking to watch as well as, as you start to see, you know, whoever's going to capitulate, sell at a loss as kind of done so. And we're still in this, you know, while we're ranging, you, you have, you know, still some of these, some of these coins that, you know, are looking to exit the market,

• 15:16Speaker 02

  are selling at a loss while you're seeing the long-term holders come in and scoop those coins up. So that's kind of like the process that we're in, where I know we've been saying this for weeks now, but it still is, weak hands selling to strong hands. It's just, you know, a question of how long is that process going to take?

• 15:34Anthony Pompliano?

  Obviously, there's people selling, there's somebody else buying, and it seems like those are all long-term holders?

• 15:40Speaker 02

  Yeah, 100%. So, you know, I, I put together this chart where you're comparing the long-term holder supply holdings versus the short-term holder supply holdings. So Glassnode for this uses 155-day threshold, which comes out to five months to determine if an entity is a long-term holder. And you're seeing those entities have been stacking really heavily, while it seems like the shorter-term holders have been selling off pretty significantly. And it's, it's interesting because over the last month, the selling from the short-term holders has offset the buying from the long-term holders.

• 16:21Speaker 02

  But over the last week, we've actually started to see the long-term holders are now offsetting the selling from the short-term holders. So it seems like we're flipping back into this accumulation where we're...

• 16:34Speaker 02

  Either A, you know, the the long-term holders are buying more, or B, the the short-term holders are are selling less. But you are starting to get that transition from, you know, the short-term holders overpowering uh the buying of of the long-term versus, you know, now we're starting to see uh long-term over the last week um stacking heavily than the shorter term. And that and that's something that I think um I I would like to see going forward. Um and and so that that's age, um then if we're gonna talk about like the size of of the cohorts. Um you you've had this pretty clear downtrend now for like two and a half months, uh two, actually, I'm sorry, like more like three months. Um where we've seen less and less whales coming in on the blockchain.

• 17:19Speaker 02

  Um a- and some of this is, you know, so for Glassnode uses a a thousand BTC threshold for, you know, ca- calling someone a whale, um a- and so part of this is possibly just these entities um reshuffling their their uh holdings into smaller wallets. Because you've seen a a while the whales over a thousand BTC has been trending down. Um there's also been a a pretty uh significant move up in a hundred to a thousand BTC entities. So I think there's there's uh definitely some some uh reshuffling of of holdings there.

• 17:56Speaker 02

  But overall, um the the trend of of uh entities over one thousand BTC has been trending down, while retail continues to trend up. Uh it seems like, you know, retail has really been stacking harder than they almost ever have in in the history of Bitcoin. I mean, the the this, you know, I had this chart and it it shows um the supply held by these these smaller entities. And I mean, it's pretty much just like vertical right now, so. Uh I think that, you know, that it's two things, A, it's it's bullish for Bitcoin adoption. Because you have whales scaling out while retail is is scooping up those coins. And obviously, the coins are getting uh, you know, more widely distributed. Um so there's that aspect of it where I think it's bullish for adoption.

• 18:40Speaker 02

  But I think in terms of price, you're gonna you're gonna need to see. A jolt in Wales to kind of do the heavy lifting to get us that momentum back to the upside. And, you know, possibly that that's something that we'll see if we have a definitive move to the upside out of this range. We'll have to wait and see, but I would be i- if we if we have a strong move out of this range and we start to get some momentum back to the upside. Um, I'm going to be watching that that uh number Wales chart closely to see, you know, perhaps um some of that money that that's waiting to get a position now and trying to get the best position possible. Um, if they get that confirmation, perhaps if if they'll step in, but that's something I'm keeping an eye on for sure.

• 19:21Anthony Pompliano?

  Got it. So really to summarize for this week, it's basically we're in this kind of range bound. Um, you know, uh, kind of trading, there's not tons and tons of volume uh when it comes to futures open interest. There's not tons of uh really takeaways in terms of where we're going directionally. It kind of feels like uh when we break out, it's going to be violent in either direction. Um, and people are just kind of waiting and seeing uh which direction that's going to be, but if we do break out to the upside. Uh, you know, you'll see people pile in and then also on the downside. Uh, you also see people kind of pile in. It's just right here. People are a little uncertain about the the short term future.

• 20:00Speaker 02

  Yeah, yeah, that that's my base case. Um, and I think, you know, you just need one person to kind of step in and make the move. Um, a- and then people will follow in either direction, I guess, but uh, you know, supposedly there's a an announcement. I saw Bitcoin conference put out something that Jack Mahlers is uh making a big announcement today around four, so maybe that'll be the announcement that pushes us up. We'll see what happens.

• 20:25Anthony Pompliano?

  Absolutely. All right. What uh what what's the one thing you're going to be looking for uh over the next week? Uh, in terms of uh metrics, is there there one thing specifically you're looking at, or you're just going to kind of look at it in totality?

• 20:37Speaker 02

  Yeah, I think, um, you know, this stuff is, is you can't necessarily look at one thing. You kind of have to have, I like to look for confluence across multiple things. Where, you know, i- if you have several indicators that are, um, you know, preferably uncorrelated, that are all telling you the same thing. And then you're also kind of looking at the technical side of things where I look mostly at the on-chain, uh, data, but I also look at, you know, obviously some of the, some of the technicals. And if you have, you know, your fundamental analysis, on-chain and technicals all lining up, um, kind of saying the same thing, you know, statistically, the odds of that, um, are way higher. So I, I think, you know, I think you need to, to look at multiple things, but if I were

• 21:22Speaker 02

  to just kind of pin it on a few, um, I think the, the whales is definitely one thing, like seeing that, that jolt upwards in whales, uh, also looking at the, the futures open interest, you know, if we start to have a little move up and then all of a sudden all the, all this leverage piles in, which is possible, um, I, I don't think that would be super bullish short-term, um, because all of a sudden you, you have this big incentive for whales to flush that leverage out and, and, uh, scoop up some cheaper coins, uh, if they can liquidate all the, all that leverage. So that's something, uh, to look at. And then I'm just, you know, still following this trend with, with the short to long-term holders. That's kind of, it's interesting because, um, you, in, in 2017, obviously we have a

• 22:06Speaker 02

  very small sample size with, with these cycles, but in 2017, there's this kind of clear dichotomy where the long-term holders were selling off into strength throughout the whole cycle. The short-term holders were, you know, buying the whole way up, basically buying the smart money's bags the whole way up. Um, but in 2013, you saw that. And then when we had the, you know, we had two double pumps. So we had a big parabolic advance, drawdown like, I think peak to trough was like 80% or something like that, in a relatively short amount of time, like I think a few months. Uh, and then we had the second parabolic advance. Uh, between those, you, you saw something similar to what we're seeing now where the... The shorter term holders are selling off in the middle of the cycle and then the long-term

• 22:51Speaker 02

  holders are coming in and stepping in the cycle. I think this is something we touched on last week, but that's a trend that I'm interested in seeing how that continues to play out moving forward because from that, from that aspect, this is definitely not looking like 2017.

• 23:09Anthony Pompliano?

  Absolutely. Where can we send people to find you on the internet or subscribe to the newsletter that you're writing?

• 23:16Speaker 02

  Yeah, so I'm on Twitter at W Clemente III and then I do a newsletter every week. The Friday one goes out with pop, obviously, and then Monday I do it on my channel. My channel is BTC by WC3. Substack.com. You can subscribe there and I'm always spitting stuff out on Twitter. I just, you know, whenever I see something interesting, I'll throw it out there. So if you want to follow me on there and, you know, I answer, I'm super active on Twitter. So if you have any questions or, you know, if you want to say, hey, Will, this is something really cool that I saw and I'd love to chat with anybody about the market. So feel free to reach out.

• 23:54Anthony Pompliano?

  I think you're doing a fantastic job. I think everyone else is really enjoying it. So keep up the great work and we'll do it again next Saturday.

• 24:01Speaker 02

  Appreciate it, Paul. Have fun in Miami, man.