#603: Bitcoin Supercycle or the Last Bitcoin Cycle? With Willy Woo and 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. We are joined this week by Willy Woo, the OG on-chain analyst. Subscribe to Will’s new email newsletter here: https://btcbywc3.substack.com/ Subscribe to Willy Woo’s new email newsletter here: https://willywoo.substack.com/ In this conversation, we discuss the history of on-chain analytics, what happened over the last few months, current market structure outlook, and questions from Twitter. ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin, ether, and over 30 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. ======================= 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.

• 0:00Anthony 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. We're also joined this week by Willie Wu, the OG on-chain analyst. You can subscribe to both Will or Willie Wu's new email by clicking on the links in the description. In this conversation, we discuss the history of on-chain analytics, what happened over the last few months, the current market structure outlook, and we take a couple of questions from Twitter. I hope you really enjoy this conversation with Will and Willie. I did, and I think you'll learn a lot from it. Before we get into

• 0:43Anthony Pompliano?

  this episode, though, I want to quickly talk about our sponsors. First up is Gemini. Gemini is a leading regulated cryptocurrency exchange, a wallet and a custodian that makes it simple and secure to buy Bitcoin, Ether, and over 30 other cryptocurrencies. They offer 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 three minutes at Gemini.com/pomp and get $20 of Bitcoin after you trade 100 bucks or more within the first 30 days. That's right, you get free Bitcoin, 20 free dollars of Bitcoin, just for listening to this podcast, if you go and sign up at Gemini.com/pomp, trade 100 bucks, and they'll give you $20 for free. I'm no mathematician, but if you go and you buy 100 dollars worth of Bitcoin, they'll give you 20. It's like a 20% return

• 1:28Anthony Pompliano?

  right out of the gate. Don't call me a mathematician, don't call me a financial advisor, but that's what that says to me. Gemini.com/pomp, 20 bucks of Bitcoin after you trade 100 dollars within 30 days or more. Next up are my friends over at LMAX Digital, the number one institutional crypto exchange. Why have you never heard of them? Because you're not an institution. But if you work at an institution, you should know about them. LMAX Digital offers clients the deepest pool of crypto liquidity on the planet, underscored by 100% uptime track record through volatility spikes. They keep the exchange up, and they keep it liquid. Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and

• 2:10Anthony Pompliano?

  Custodial services. They feature a central limit order book, streaming spot Bitcoin, Ether, Litecoin, Bitcoin Cash, all paired with the US Dollar, Euro and Yen. LMAX Digital is used by every single institution that I know. They literally are the secret of the institutional world. LMAX Digital. They're secure, they're liquid, and they're trusted. You can go learn more if you go to lmaxdigital.com/pomp, lmaxdigital.com/pomp, or go click on the link in the description, lmaxdigital.com/pomp. That's where all the institutions are, and that's why you don't know about them. LMAXdigital.com/pomp. All right, let's get into this episode with Will and Willie. I hope you guys enjoy this one.

• 2:51Speaker 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.

• 3:19Anthony Pompliano?

  All right, guys. Bang, bang. I've got Will and Willie here with me. There's a lot of W's in both of your names. I'm super excited about this. I feel like Willie is the OG of on-chain metrics, and Will is fast becoming one of the crucial pieces of information in the market on on-chain metrics as well. Willie, thanks so much for joining us today.

• 3:41Speaker 02

  Yeah, thanks for having me, Pomp.

• 3:43Anthony Pompliano?

  Absolutely. Let's just start with, maybe you can introduce yourself and give us a little bit of background in terms of why you got interested into on-chain metrics and kind of maybe what you look at on a day-to-day basis when you wake up as a signal for what you think is kind of the most important metrics.

• 3:59Speaker 02

  Yeah, okay. I got into Bitcoin in 2013, kind of coming from a tech background, you know, startups, always into tech and data, and that's what appealed to me and Bitcoin, more the tech side of things. And as I sort of delved past all the tech, you know, we had this blockchain, and I started looking into what was, you know, data in there, trying to draw conclusions from it, and that ended up. Becoming a field in its own right, you know, I started in on-chain analysis in 2016. Kind of put out some of the first on-chain indicators like N V T. So it was 2016, early 2017, that's how I knew this whole field is.

• 4:43Speaker 02

  And now something like four, five, six companies dedicated, providing this kind of data to investors now. So when we're looking on-chain, it's really a look into the fundamentals. It's the fundamentals of what investors are doing with their capital. You can see them come in, you can see their movements, you can see the age of coins. You can see, you know, new people coming in to buy or new people selling. And you can draw kind of conclusions, like if you see a whole lot of new people selling and to a dip in a bull season, you you kind of know that those are the like the weekends being shaken out. You know, if you see a whole lot of old hands selling all of a sudden, then that's a little bit more serious because I'm more experienced.

• 5:28Speaker 02

  So that kind of gives you an idea of what we're looking at in on-chain. It's looking at these fundamental movements in capital from real people, less the technical analysis, which most traders use, which is essentially just tracking the price and volume movements on exchanges and trying to draw all sort of, you know, metrics around that. Ultimately, the fundamentals prevail over the long term. Short term, the technical analysis is more, I'd say, timely. It can, you can time markets in a shorter timeframe, but I've seen many, many times in the Bitcoin market where the fundamentals say one thing and the technicals say another. And it's, I've never seen the fundamentals fail, actually.

• 6:12Speaker 02

  So, you know, when I wake up and I check the markets, I usually check flows going in and out of the exchanges. It's giving me idea of the buying power or the selling power of real investors rather than just the traders. I also look at. You know, one of these metrics that Glassnode do is what they call liquid supply. And that's really a qualitative view of the market where the coins are moving between strong holders or weak holders. I use that a lot. Just to give me an idea of, you know, who's buying or selling and those two combined give me a very good readout. And then there's about, I don't know, 20 other indicators I might look at depending

• 6:55Speaker 02

  on the time and the structure of the market. Glassnode have about 300 to 400 charts. So ultimately, all of them get used throughout a macro cycle. It's just different times. Like, obviously, right now with China banning their miners, you know, looking at the hash rate on the network, the speed of the blocks processing, the miners' wallets, that sort of comes into play. So it's just kind of, you know, it's an ECG, I think. It's like a readout of this entire animal called Bitcoin. And you can look at it in 200 different dimensions and on-chain analysis gives you that.

• 7:38Speaker 03

  Willie, I want to follow up with this thread you put out. Maybe you could just kind of break this down for listeners. The one you put out yesterday, you're looking at the supply shock ratio, liquid supply ratio, and then also exchange flows. You know, I guess we could just kind of get into real quick. What exactly are those, you know, metrics showing and just kind of getting into this whole, you know, like reaccumulation phase that we've been kind of describing?

• 8:05Speaker 02

  Yeah, okay. So I measure a supply shock in two ways, a quantitative view and a qualitative view. The quantitative view is really just the speculative inventory that's sitting on exchanges, you know. So you can draw a pretty easy conclusion that the supply sitting on exchanges are the coins that are able to be bought. Admittedly, some of them are long-term holders, particularly on Coinbase where noobs sort of, and particularly retail store long-term their coins. But mostly, the coins on exchanges are speculative coins. And what you can see is

• 8:47Speaker 02

  As coins deplete of that inventory, there's in effect a supply shock. So, you know, that's been the story of this last 12 months. Ever since Covid hit the economy, we've been in this supply shock set up where the inventory on spot exchanges are slowly depleting. And that means that's less and less coins able to be bought. That puts a bullish price pressure on. And this latest pullback, where we pulled back from the 50, 60,000 range into the 30s, you could also see a massive flow back into the exchanges. So a lot of supply being put back onto the market.

• 9:31Speaker 02

  So that's reverse supply shock. But what we're seeing very recently over this kind of sideways band is actually those coins moving off again. So we're back in this sort of supply shock trend upwards.

• 9:47Speaker 02

  And the other view of it is, actually, it's the indicator you created, Will. It's a ratio of like last nodes measure, like I was mentioning of liquid supply. I call it Rick Astley, you know, you've got two types of people in the market. There's the speculative guys that you can look on their wallets and you can look at their history and see that a lot of coins move in and out of their wallets. They are in the game to trade more than most. And then the other side is the investor that stacks their coins. And not a lot leaves from those wallets. And I call those guys the Rick Astley.

• 10:31Speaker 02

  Rick Astleys of this world, they're not going to really let go of their coins. So when you draw a ratio between the two, which what you did actually, you can create the similar thing, but it's based on the quality. Like as more coins flow into the strong hands, the Rick Astleys versus the speculative hands, you'll see the same sort of supply shock, you know, the speculative hands. Are willing to sell their coins, whereas the Rick Astley's aren't, they're holding and they're not going to let their coins go. Um. So as the strong hands gain more and more of those coins, there becomes a supply shock and the coins held by

• 11:12Speaker 02

  speck of hands is reducing. So um I look at that, you know, and um in both cases, whether it's the inventory on spot exchanges or the qualitative view of um coins held by the strong hands are, they are really moving towards um long-term holders, um moving off exchanges and we're, you know, if you were to look at the qualitative view, um we're really um making near highs again. We're back in the zones where Bitcoin was trading fifty-five, sixty thousand dollars. Um. And that's continuing to climb. So it's a very interesting time in the market right now where the price

• 11:51Speaker 02

  is divergent from on-chain. Um. The price action and technical view of traders are selling down. Um. There's a lot of shorts in the market, um and it looks very kind of like a bearish grind. Meanwhile, the on-chain picture shows um a lot of accumulation, like very ridiculously strong accumulation and um that is not reflected in the um price action. And we last saw this um in the months before kind of the October where um price had been ranging sideways, it pumped up to like, what was it? Um eleven thousand, twelve thousand, people got really bullish and then it dumped

• 12:34Speaker 02

  um down to ten thousand. And so the the trajectory was downwards and sideways and all through that time, um the supply shock was was um steeply rising, steeply rising, a lot of coins moving off exchanges, a lot of Rick Astley controlling more and more of the coins. Um. And that eventually um exploded into a complete um bullish run um from November onwards. Um. And if you, if I recall, um.

• 13:05Speaker 02

  You know, the the narrative back then was we just had this COVID crash back in, you know, the April, uh, May, April zone and um Bitcoin was very, very correlated to um stocks. So um and and gold was starting to take off and people were saying Bitcoins are failed safe haven. It's highly correlated to the stocks. It didn't hold over this um this sort of bearish crash we had. Um but the actual on-chain picture was completely different. It was at that point, long-term investors were stacking, they were stacking hard. Um supply shock started climbing straight up from that point.

• 13:46Speaker 02

  Um and actually, it took a number of months before the market kind of priced that in. And there was a realization that the coins were running dry. Um and you know, it took a while for the kind of speculative um volumes and in the in the market to kind of um get squeezed. You know, I kind of picture uh this, the futures and derivatives exchanges um having a huge dominance over the short-term price. And at that point, um the price was swinging wildly um above what I would have considered a, you know, there's a particular floor that investors will support and was trading above that. But that floor started climbing higher and higher.

• 14:30Speaker 02

  Um and at around that October, um price kind of met um that that floor um estimate what um long-term investors were supporting and it bounced, you know, and that was when the the market um realized that there was supply shock and we ran up to um forty, then fifty, then sixty thousand dollars. So right now, the structure's similar. Um there's a lot of bearish people in the market. The price action reflects bearishness and underlying it, there's like this invisible um, you know, accumulation from um long-term investors that I haven't seen anything like this since October last year.

• 15:12Speaker 03

  It's interesting, like, I think the key point there is kind of the fact that there's this huge divergence. And like, I've been looking at some of these charts lately, and I've been like, am I crazy? Like, because, you know, this has been going on for so long now, and price keeps diverging from the fundamentals. But it is kind of wild, like you said, looking at that other times, I mean, at least in the last year or two, there hasn't been a divergence this large since, you know, like you mentioned, September. So just waiting for that information to kind of get priced in. But, you know, in the meantime, it's like, this thing is just growing and growing and growing. Looking at that big uptick, you know, in that liquid supply ratio this week was pretty wild. And then also seeing,

• 15:54Speaker 03

  and I guess you could touch on this if you want, you know, the uptick in whales, where that's something I had been watching for a while. It was the number of new whales, which have been trending down. But you had actually pointed out to me that, yeah, the number of whales were trending down, but their supply that they were holding was actually moving up since that big capitulation event. So it's almost like, you know, supply was getting concentrated into older whales. But then this week, when we had that big uptick, I think it was like 65,000 coins accumulated by whale entities in one day, at the same time you had an uptick in new whales. So I think that was interesting to see, maybe, you know, finally getting some new large buyers, where it had seemed like it was kind

• 16:39Speaker 03

  of, for the most part, kind of like older whales buying.

• 16:44Speaker 02

  Yeah, like the whole rundown, like a lot of the coins that were moved between wallets, between entity wallets, different participants, they're very young coins, you know, they came in, you know, like, in the three to six month span where they bought in below 3,000, even 10,000. I think they were very much, you know, this was also a time that whales were selling down. And I think that that was reflective of this kind of new thing we have in 2021, where you've got a lot of hedge funds now in the game, and high net worth individuals.

• 17:23Speaker 02

  And we know these guys came in around the start of this year. And, I mean, it's interesting, because usually in a bull run, It's usually the the new guys that come in, they get shaken out, but they're usually the um, you know, what would you say, like the new hands, the noobs, the noobs get shaken out and the the strong hands and the the the old guys that know exactly what's happening in Bull Run, they snap up those those dips. Um, whereas this time we had like, um, you know, hedge funds, which are, you know, supposedly savvy, I mean, it to be savvy, um, they're savvy in traditional finance,

• 18:05Speaker 02

  um, maybe they're not so uh savvy in um Bitcoin, um, they um took their profits, they took a lot of their profits off the table. Um, and so you ended up having whales, these huge whales dumping, dumping in a bull run um onto effectively much smaller guys, um, medium sized people in retail who are, you know, they're they're stacking hard, they're buying up these coins. Um, so the dynamics kind of flipped. It's a very weird cycle this one. Um, and it's interesting to see that flip now. Um, yeah, the the the it's more so the the coins under control and I kind of wonder if,

• 18:47Speaker 02

  you know, what's your take on I'm I'm wondering if there's yet unannounced news, you know, maybe, you know, like we know El Salvador is, you know, in for what 150 million in their trust fund and they've got about 135 million that they're going to give out to their citizens. Um, that's a fair amount of buying pressure in the sideways band. Um, but I kind of wonder if there's others, you know, there's like eight Latin American countries now very kind of bullish on Bitcoin being a big thing for their economy, um, at least they're making noises of it. I I do wonder if we've got some unannounced news that we can see on chain, but um, you know, we don't know what exactly that is right now.

• 19:30Anthony Pompliano?

  Willie, one of the things that's really interesting to me about all of this is as we see folks come into the market, I think most people who pay attention to this stuff have wrapped their heads around, okay, strong hands are buying and people who have been around for a long time kind of understand cycles and look for points to accumulate. But one of the things that has changed, let's say in maybe the last 12 months or so, is we now have corporations, financial institutions, and even nation states that are starting to actually buy Bitcoin and hold it. Do you have any insight or any way to kind of think through it from a framework standpoint as to maybe the quality of these long-term holders or a difference between,

• 20:11Anthony Pompliano?

  let's say, an individual who's been a long-term holder, been around for a while versus an institution, a nation state, a corporation, etc.?

• 20:21Speaker 02

  Well, like, definitely the quality completely changes. You kind of tend to have much less signal coming from these kind of guys because they're very measured moose. Like, if you look at Michael Saylor's market strategy, they're buying kind of in bulk in separate rounds. He's actually, you know, announcing it before, I guess for regulatory reasons. So he kind of gets front run a bit. But once those coins get mopped up, that's just a whole bunch of supply locked away. And, you know, there's not a lot of signal coming from his wallet, right? It's just those coins are aging. And so it's, you know,

• 21:03Speaker 02

  like, in the old days of like 2016 and the stuff before that, you know, the on-chain had a lot of the dominance and it was just to see your participants and you could see all the transactions on-chain and you kind of get this...

• 21:20Speaker 02

  You know, it's it's a lot more predictive when you've got, you know, a million people individually acting rather than like five, all right. And so I think that's that's a lot of signal being removed. And I don't think on-chain necessarily is useful for that. I think it's much more useful actually picking up the phone and talking to these guys in the in the industry because, you know, although these coins are held by a lot of like, you know, shareholders, I guess, split owners within, you know, a corporation or even a nation state, there's a lot of vested interest in the coins. The decision powers are very, very centralized. So in that regard, it starts to

• 22:05Speaker 02

  look a little bit like a small altcoin, their their holdings. It's like, these people have very concentrated power to just move their coins. And it has a huge impact, you know, even like things like the grayscale Bitcoin Trust, that's that's a really, that's, you know, that holds three and a half percent of the coins. And you can see the impact of even the small, you know, way, well, let's just say the way it's structured with the lockups and and the design of that that instrument, it has an impact on the market, a significant

• 22:46Speaker 02

  impact. And so, yeah, like, these entities that are very concentrated, obviously, they they they kind of add a shock to the market if they do anything. So, you know, I don't know if it's an on-chain thing we look at. It's it's likely, you know, other data in these conversations.

• 23:09Speaker 03

  Willie, one thing you kind of touched on, I just wanted to, you know, kind of like circle back to, I think a lot of the capital that, you know, people kind of need to keep this in mind, a lot of the capital that flew in or was flown into the market, you know, towards, call it, you know, late last year, you know, November, December, was through grayscale for You know, people trying to do the arbitrage trade and then also, um, you know, the cash and carry trade, the, you know, the difference between the, the spot and future, long spot, short in the future and just kind of capturing that, that basis. Um, you know, I think a lot of, and, and I think you pointed this, I don't remember exactly who pointed this out, but part of that down draw in whales kind of coincided with, um, the, the spread between the futures and spot dropping off. So.

• 23:55Speaker 03

  I, I suspect a lot of those whale entities that we saw come in, um, you know, kind of at the beginning of the bull run, because I remember that was a big narrative, like, uh, oh, you know, there's, there's this huge uptick in whales, you know, it was like went vertical after we broke all time highs. Um, you know, I suspect a lot of those whales weren't actually in Bitcoin for the asset itself. And we're just kind of seeing this market neutral trade that they could just, you know, take, but they had to, they had to own the underlying.

• 24:25Speaker 02

  Yeah, I'm not, I'm not sure how much of that impact was from the market neutral participants, um, to be honest, because like we saw the whales started to sell down. Um, we saw the whale start to sell down, um, quite early. I think it was, um, around March, they started to sell down. Um, yet like the yields that you were getting in the cash and carry trade was climbing and climbing. It was, it was getting very, very lucrative. Um, the yields only dropped off after we kind of got down to the forty and thirty thousand mark, um, and people, people were interested in shorting and market went into backwardation.

• 25:03Speaker 02

  Um, the, you know, at that point, you, it made sense unwind out of your, um, position, right? And because you, you're not doing yield. By holding your Bitcoin and shorting it anymore. It's actually costing you money. And so we did see, um, a little whale, um, holdings drop. At that point, and I think that was responsible for that cash and carry. Um, I, I kind of do think that this was a speck of whales, you know, like we, we know that Rafa bought around ten thousand and they sold a bit. Um, in the, what was it? The, was it in the, um, thirties, something like that. And then they sold the remainder in the fifties.

• 25:44Speaker 02

  Yeah, like they, they, no, they sold, no, they sold, that's right, they sold some in the Elon Musk pump, but then they sold the remainder, saying that, oh, I think they cited that the kids weren't going to be playing speculative games anymore because COVID was coming to an end, or something like that. And then I know the New Zealand, one of the retirement funds in New Zealand, Kiwi Saver, they, they also bought in the 10,000 and they exited in the 50 to 60,000. So there, there's a couple of non-funds that I, I, I know of, well, that's well, publicized. And so we do know that there were funds behaving in this way.

• 26:26Speaker 02

  And if that's the tip of the iceberg, there's certainly a lot more whales than that, than funds being announced that they've bought Bitcoins. So there's probably a lot of this action happening. You know, fund managers are highly connected. They might be copy trading more or less. So, yeah.

• 26:47Speaker 02

  I, I think we did get a bit of south side and you, you see that reflected in the GBTC inventory not climbing anymore.

• 26:56Anthony Pompliano?

  Willie, one of the things that always fascinates me about the on-chain metrics is kind of this idea of like the on-chain metrics can't lie, right? There's the data is the data, how you interpret it could be different for different people. But, but it's this real time, transparent view into what's happening in a part of the market. How do you think about the on-chain metrics being kind of more reactive or more of like a lagging indicator for things? So sentiment changes than the on-chain metrics change versus the on-chain metrics are really driving maybe sentiment or other types of activities in the market? Because it feels like there's a relationship where, you know, if you kind of zoom out and look historically, you can definitely tell, okay, at some point in the market, we saw a bunch of the metrics change.

• 27:39Anthony Pompliano?

  And around the same time, sentiment might have changed. But, but what do you think about the relationship between those two things?

• 27:46Speaker 02

  Yeah, it's a good question. I mean, there's so many different metrics you can look at. And I find some more predictive than others, and others certainly lagging. And so, you know, it's that constant search of finding the leading indicators. And yeah, I think, you know, on chains, really, it's, you know, there's there's there's short, medium, and long-term on-chain indicators. And some of the highest value you can get as an investor is the longer-term stuff. Because you want to know when is a good time to enter and when, you know, it's probably highly risked and worth taking some money off the table.

• 28:32Speaker 02

  And so the macro long-term indicators of on-chain is very useful. And whether or not you call that predictive, you might just say, look, things are getting dicey here because our on-chain models are saying that this is where the fundamentals are, and this is where the prices. And when you do the ratio between the two things are very highly speculative in a, you know, almost mania phase. And that kind of stuff is interesting. It doesn't say the price is going to crash, you can go even higher. But it can tell you your risk you're carrying is high, and it might be worth de-risking a bit. And so that's that's kind of the more macro side that's super useful. And then you can get into the shorter timeframes like demand and supply that's happening over the week to week.

• 29:16Speaker 02

  And that stuff, it's still pretty reliable, but it's,

• 29:23Speaker 02

  you know, it's not going to be, it's not going to be perfect because it's based on interpretation, it's based on, well, these are markets. Anything can happen. Like, at one point, I remember I'm saying, this thing is tentatively recovering. I think I'm bullish. And then, but the key thing was it's tentatively recovering. And then Elon Musk tweets about Tesla not accepting Bitcoin and validating this this FUD on Bitcoin, you know, to the mainstream who aren't very clued on. Bitcoin, they're just validating this whole rhetoric that it's destroying the planet with fossil fuels. And that totally started this whole bearish run. And there's no way you can predict that, right?

• 30:07Speaker 02

  Onchain doesn't predict these market moves that are outside. You know, like that basically means the onchain investors that we're seeing got sideswiped by some random event in the market. Doesn't mean it was wrong in saying that, you know, investors are buying in the bullish. It just means that we didn't pick this unpredictable event. And having said that, on the short term, when I say short term, maybe in the three weeks out. I mean, I do a letter and there's about 22 forecasts out now. And the backtrace is high 70s or 80% reliable.

• 30:47Speaker 02

  So if you're a trader and you're trading a technical signal, typically you're doing really well. You're in the 55, 60% accurate in your analysis. So onchain currently, even the short timeframe stuff can be predictive if you're looking at the right stuff.

• 31:05Anthony Pompliano?

  Got it. And before we let you go, maybe talk a little bit just about where we are today from a market structure standpoint. Kind of what are you looking for moving forward? So are there specific milestones? Are there specific things happening with the onchain data that you'll say, you know, hey, this is going to be a big moment. We don't know when it will happen, but I'm looking for it. Or is it more so you just wait till the onchain metrics develop and then analyze what kind of happens in real time?

• 31:31Speaker 02

  Yeah, right now, the big story is like, when does this accumulation band pop? Like, I mean, it sounds almost funny, you know, if you talk to people on crypto Twitter, because everyone's so bearish, saying we're in a bear market. And I'm like, This is a bull market. There's no mistaking this. Like, we've got X-ray vision on what the investors are doing, and it's bullish whilst price is sliding downwards. And I think the next major event is when the fundamentals squeeze the price action and we we break out of this, what I'd call a reg accumulation ban, right in the middle of a

• 32:10Speaker 02

  bull market, like a, like a bearish shock that is now being shrugged off. So that's the, that's the next thing I'm looking for. And then typically, once, you know, we usually go get a few pullbacks within a bull run. This is a really weird one, a whale powered pullback. But I'm really, after that, I'm really interested in seeing how the tail end of this bull market develops, because this bull market is, you know, it's structured unlike any I've seen before. And the, the, the market of, you know, the whole market is completely different. You know, we've got very well-developed futures

• 32:54Speaker 02

  and derivatives and options. And now we've got, you know, large ETF instruments. So, and we've got a lot of leveraging system, you know, BlockFi, these kind of loans, and a lot of hidden leverage like that. So it's getting a more, it's become a more complex beast. And I think we've already seen the way the price is moving in this, this, you know, this epoch, this halving epoch, four-year cycle. It's unlike anything. It's not smooth. It's lopsided, volatility all over the place. And I really, I'm just really interested in seeing how that

• 33:33Speaker 02

  structures later on. I'm not predicting, I'm not predicting, you know, waiting for some event in the end of the year. I'm more like using on-chain as a map to try and get a grasp of what exactly is happening in the market. And I have no idea what's going to happen in fourth quarter. You know, we've got like a nation state coming on board. What will that look like on chain? You know, we've got Lightning Network with that nation state starting to fire up. And so there will be a lot of activity locking into that and taking it off the chain, and trying to see if we can get some data on that. So yeah, it's, it's kind of a wait and see and like figuring it out as it comes.

• 34:17Speaker 03

  Willie, do you know any positive news as Hopium? Come on now.

• 34:20Speaker 02

  Any positive news? I think we just sort of talked about it. I think the positive news right now, what's that?

• 34:28Speaker 03

  I was gonna say, we're the Glassnode Hopium guys.

• 34:31Speaker 02

  Yeah, yeah, exactly. Glassnode Hopium guys. I think the positive news is that there is so much bearish trolling on Twitter, you know. Like, if we can get more and more people bearish, then that'll be certainly the bottom.

• 34:44Speaker 03

  I want to ask you, what's the top model look like? I know this is, you know, kind of a reactive model that, you know, you can kind of gauge where the trajectory of it is going, right? But I'm assuming that your opinion on that has changed. I know you had been kind of looking at, you know, 200, 300K. I was just curious, you know, where that kind of stands in your mind.

• 35:04Speaker 02

  Oh, yeah. So people like to cite that I have an opinion, like I make a prediction. All I'm doing is reading off the model. And like, I get the luxury of saying the target is a moving target because the model keeps changing because it's basically, you know, a moving average over the market cap is what it's based on. And it's hit every top in the history of Bitcoin, you know, 12-year history. I'm not saying it'll do it this time because it's such a weird cycle, but that top model, and there's another model which frames the bottom.

• 35:39Speaker 02

  They give me an idea of where the top may be. And, you know, first quarter of this year, we were arranging up to the 300 to 400,000 dollar range. Right now, the top model is 157,000 dollars today. Of course, it moves. And so really, it's looking, I don't know. If we squeeze out of this accumulation band like I'm expecting, I would say that we'll start curving upwards and run the 250 to 350,000 dollar range. Sounds a bit ludicrous right now, but that's what the model says. If we hit it, you know, if we hit it, don't know if it will.

• 36:22Speaker 03

  Would you be looking for, I guess a few things. So like, obviously, we're talking about this reaccumulation. When that, when that's kind of supply shock takes place, do you suspect that, you know, shorts? Because when you look at like funding, funding's been negative for well over a month now. I mean, there's been a couple of days of slight positive, but in general, do you think there's a possibility of us kind of getting this, this short squeeze on the way back up? And then second of all, you know, we, we have been kind of talking about funds that got in and like, you know, 10 to 20 K and then had moved to take token profits, you know, kind of at the beginning of the year. Do you think there's a lot of, there's a lot of momentum funds, like kind of that will come in

• 37:07Speaker 03

  if we have a breakout and kind of try to ride that momentum wave, right? Like, so maybe we'll see an uptick in whales or whatever it may be. That's kind of showing like, once we break, I don't know, whatever it is, the 208 moving average, something that kind of gives capital that's sitting on the sidelines, the confirmation that, okay, yeah, maybe we were waiting for lower prices, but this thing's now broken out to the upside. So now, you know, we feel confident to go ahead and take a position. Do you think you, you get that effect or like, have you gotten that effect in the past? Once Bitcoin breaks out of some major resistance?

• 37:38Speaker 02

  Yeah, I, you know, I will remember in the 3000, 4000 day and it broke out and it really was a squeeze. I can't remember how the, the drift of setup at that point, but looking at the, the squeeze, it looked like it was primed to pump upwards if it broke resistance. Presently, there's very, very little interest compared to, you know, open interest is very low. The number of contracts in the system is low. So I'm not entirely sure if we'll get a squeeze, but you know, historically, we, we do squeeze. So squeezing meaning we get a very violent move.

• 38:20Speaker 02

  And this time it'll be a short squeeze because we're on shorting, so it'll move to the upside.

• 38:26Speaker 02

  So I kind of expect it, but right now I'm not seeing enough open interest to see anything really very violent. But I do think you're right in that as this thing starts to pick up momentum and it shakes off all this crazy bearishness of, you know, not only do we have all this crappy energy fossil fuel narratives thrown at Bitcoin, then we had on top of that China shutting down all of their mining, which will take apparently roughly six months for all those miners to really move that infrastructure and set it up and redeploy it. So the hash rate of the networks,

• 39:07Speaker 02

  you know, I think, what is it, 40% down or something ridiculous. So there's a lot of bearishness that's been thrown on Bitcoin. It's still chugging along, you know, price pulled back 50%, but it's still doing well. So if we shake that out and then we've got, you know, you look at the picture we're seeing where we've got, you know, sovereign wealth funds that haven't really been much of a story, but and I'm quite interested in these non speculative hodlers at very large scales like sovereign wealth, like El Salvador loading up 150 million for their trust. I think Singapore loaded

• 39:48Speaker 02

  up on some Bitcoin, but there's a number of sovereign wealth funds that I think must be looking at accumulating, yet, you know, I don't think we've seen much of that yet. And I think that's a story for like the fourth quarter of this year, maybe if it happens. And if it happens, then this is going to really change the cycle because we have that kind of buying power on, on typically what we'd expect to be near the end of a bull market. We could see a really different cycle. I kind of wonder if the cycle, I'm calling it different, like Dan Hald's calling

• 40:31Speaker 02

  this a super cycle. I'm thinking this might be the last cycle, meaning at this point Bitcoin doesn't see this very strongly imprinted four year cycle. And we, we, we do more of a random walk and it's highly correlated to macro and we just random walk all the way up to a million dollars in a few years.

• 40:54Anthony Pompliano?

  Willie, do you think that's the top? Why a million dollars? Why not 10 million or 500?

• 41:02Speaker 02

  A million plus, you know, I have, what is it? There's, there's no top to Bitcoin because fiat has no bottom, was it? Yeah, I think that we're, you know, the, the monetary base of civilization is about to be reset, more than reset, reinvented. I'm, I'm looking at this, it's like people are looking at this as reset of long-term debt cycle, you know? Reinventing money, money gets reinvented every roughly 100 years. And I'm like going, well, if you look at when money was invented, that was the agrarian age, you know? So we had, we shifted from not, not trading to actually using money in agriculture and all this technological advancements and that led to civilization.

• 41:47Speaker 02

  And I think this is the same thing. We're going from this kind of industrial age to a digital age. But, you know, it's a real first reinvention of money since agrarian revolution. It's a one in 10,000 year event. It's not a 100 year reset. So, um, yeah, it's, it's, I think it's gonna, it's gonna,

• 42:11Speaker 02

  the top on it is roughly one to one to world GDP and market cap, which is what 100 trillion?

• 42:20Speaker 02

  I think I concur with Plan B. Plan B is 100 trillion. So there might be a quadrillion by the time more money gets printed.

• 42:30Speaker 03

  It's interesting what you had kind of touched on about the cycles. This is something I've kind of thought about like, over, over time, obviously the, the supply shock has less of an effect, right? Like you, like you've analogized it to a bathtub where you're sitting in a bathtub and you have that push. And then that gives it the momentum. And then obviously like, you know, just market behavior greed kind of kicks in and, and, you know, drives the speculative rally up throughout the bull run. But, you know, over time, that push, you know, the, the pool of water is getting bigger. So it has not as large of an effect, right? On, on that, that kind of supply shock. So over time, I almost like to think of it as like the the halvings got the initial kind of inertia going

• 43:12Speaker 03

  um for the adoption, right, where it it gave people a monetary incentive to come in and and buy this thing because of the, you know, just the pure monetary appreciation of it, but then it gets to a point where the the halvings aren't necessarily driving people in through that supply shock, but the demand kind of just takes over the adoption, the network effects of Bitcoin. Once it has that inertia going, that momentum going, um then, you know, that's it's kind of just doesn't really matter as much as the the pure demand from that aspect. And then, like you're saying, you know, as Bitcoin becomes larger, as it becomes a multi-trillion dollar asset, um it's going to be much more adapt to, um, you know, following kind of macro trends and and what that landscape is looking like.

• 43:55Speaker 02

  Yeah, I'm I'm really interested in this last last cycles because it's really, um, I'll put some metrics to it because it's really based on what you're saying, the supply shock, right? Supply shock is what creates these four-year cycles and the sell pressure from the last um supply shock was eighteen hundred Bitcoins per day down to nine hundred. So nine hundred Bitcoins are being mined every day to and um that's being sold off, right? That's the sell pressure. Um now we're in the cycle where there's so much sort of trading um that you can picture um, you know, one thousand, two thousand Bitcoins potentially being harvested as fees by the exchanges. Um and that's potential sell pressure, thus selling to pay shareholders in salaries.

• 44:37Speaker 02

  So um the the sell pressure from exchanges like mining, um it's like a tax on trade and then selling, constant sell pressure. Um that that's really the same size as as the current um like mining, you know, and then we're going to drop to four hundred and fifty Bitcoins per day at the next halving epoch. At that point, it's the miniscule, the the least of the um the sell, the sell power. Like to put this in perspective, um from, you know, grayscale's

• 45:10Speaker 02

  Two percent of their their coins under custody for that um that fund, that um pseudo ETF fund generates a sale power of thirty six bitcoins per day. Um probably all the ETFs um combined currently is just over forty bitcoins per day compared to miners um that are doing nine hundred. So um by the next halving, ETFs will be ten percent of mining power as sale pressure. Um and so I wanna I wanna do this thing where you add all the sale pressure, the exchanges, the ETFs and all these kind of products that ride on top of Bitcoin that

• 45:50Speaker 02

  extract fees and Bitcoin value and then they sell to fiat. Um I think mining story is now going to be a thing of the past. Um it'll be there, but it'll be less important than these new market influences we're seeing.

• 46:05Speaker 03

  I think also like miners are, you know, the most bullish on the asset of anybody in the space because, you know, Bitcoin were to go away, like all of their CapEx would just be deemed worthless, right? Like all their machines would just be paperweights at that point. So, you know, when you look over time, miners actually have a pretty strong tendency to hold their coins. Um and even recently, you know, people have been talking about um, you know, miners have played this huge role in the selling pressure downward, but at least, you know, in Glasson's data, you're only seeing, you know, like a little over five thousand coins that were sold down, you know, kind of amidst that month in there. Um which in that now, over the last two weeks, it looks like they've actually started slightly accumulating again. So um yeah, I think I think kind of like the the whole narrative

• 46:50Speaker 03

  about miners selling has kind of been overstated.

• 46:53Speaker 02

  Yeah, I mean, it's like, uh, I mean, there was a dip. That dip was, uh, if it was five thousand, as you you quoted, um, that was very shortly after the mining, the miner ban in China and um presumably it made sense for miners to sell coins because some of them are getting out of the game um and liquidating for real and others um uh selling out to fund relocation. Um but after that sell off. We're an accumulation of coins by the miners and they're not selling and it's very much what you see with the bottom. The miners, the strong miners are left, the strong miners being the ones that didn't get shut down by China. And so they know it's a bottom because

• 47:36Speaker 02

  the sale pressure is gone now. So, yeah, it's, and interestingly, the mining, the mining, like it's really weird to be looking at the mining equation in the middle of a bull market. And I mean, typically, the sale pressure from miners is very, very small compared to the full force of buying of a, of a fully unleashed Bitcoin bull market. And so we're in this kind of tentative band where we're going sideways, where it kind of does matter. But normally, you know, back to the first conversation, there's like, you know, three, 400 metrics you can look at on chain. And mining right now is, is, is being pulled

• 48:20Speaker 02

  out of the toolkit. Whereas normally, we don't look at that much during a bull run. Very little signal because the sale pressure is very low in a bull run, but right now it's important.

• 48:31Speaker 03

  If you don't mind, just touch on, you know, the Poel multiple, which kind of dipped into a buy zone briefly. And then as well, the, the difficulty rubens, right? Something I don't think a lot of people are familiar with.

• 48:43Speaker 02

  Yeah, I am not very familiar with the Poel multiple. I remember he created it and we was like, went over the equation, but that was like two years ago and I haven't, I haven't, I haven't got it in my head right now.

• 48:55Speaker 03

  It's the issuance divided by the 365 day moving average of issuance in dollar terms. So when you, when you had, right, so like when you had the, the block slowdown, I think that coincided with why you had such a steep drop in it because miner revenue was less because there was less.

• 49:12Speaker 02

  Okay, gotcha. Okay, so that basically, pure multiple and the difficulty ribbon is very much moving the same thing then. So what you're looking at is, you know, Bitcoin network generates hash rate from the miners. And then that also translates into difficulty. The, the network makes it more difficult for miners to mine, right? And so the, the two things, they're hand in hand, and the two things are matched to keep the, the block time, every 10 minutes. Therefore, the issuance should be.

• 49:47Speaker 02

  Roughly the same. The pool model was measuring the localized issuance. And what we saw was the issuance dropped off a cliff because the hash rate dropped off the cliff. And the difficulty takes two weeks to adjust. And so, um, so essentially, the whole, the whole network started processing blocks even up to three times slower than normal. Um, and so issuance was one third during those times. And typically, when you see that kind of event happening, where issuance is so slow, um, you'll, you'll see this drop in it. It really is very similar to,

• 50:32Speaker 02

  um, what I'm measuring with difficulty ribbon, which is also measuring this drop in difficulty, which is a bit lagged. It lags hash rate, you know, the hash rate's dropped and then difficulty will correct downwards. And as it's, it's correcting downwards, eventually this thing bottoms. Um, and new miners start adding hash rate into the market. And, um, what we're really looking at is what I call the miners capitulation. The, um, the weak miners just got liquidated. Um, they could not, typically in a bear season, um, as the price goes lower and lower, eventually the weakest miners to a least efficient on optics and electricity costs. They get, they get, um, they get run into a loss and then eventually they, um,

• 51:17Speaker 02

  they exit, they exit by selling off their coins, closing out operations to pay for their losses. And so those bitcoins get dumped onto the market. Those, that sour pressure drops the price a bit and then they liquidate the next weakest miners. And eventually you capitulate all the miners down until the last, um, biggest, baddest miners, um, that are very efficient, um, are left. And so it's a weak miner call. Um, and then, um, the strong miners know it's a bottom because the weak guys got shaken out and the sour pressure has subsided. That whole sour cascade of weak miners has now ended and, um, the buying can begin. So they know that they're not going to sell anymore. They're going to hold their coins.

• 52:01Speaker 02

  And, and so the difficulty ribbon, you'll, you'll see the difficulty drop and we'll see it a visual compression in that ribbon. And then you'll see it recover. And as a visual view of that, that capitulation of the end and the pure multiple is very much similar. Um, in measuring that, um, instead, looking at it as a side effect of issuance, because it's effectively, um, those block times and, and how difficulty and hash rate work together.

• 52:28Anthony Pompliano?

  Willie, I feel like Will and I could talk to you forever. Unfortunately, we can't do that on a, on a podcast or on YouTube. Uh, before we let you go, explain to everyone, uh, the email that you put together and kind of the analysis and research that you do with the on-chain metrics and where they can go find more if they're interested.

• 52:45Speaker 02

  Yeah, sure. I launched this October last year. It was kind of a good time because it was like the start of this bull run. And the idea is really to give investors, particularly investors that are relatively new to the market, um, like a market intelligence newsletter to see, um, what's actually happening with investors as we're seeing it on chain. So they can make informed decisions. Um, because we see a lot of investors come in, they buy, they get, they get freaked out by the volatility and particularly in a bull market, you get these shakeouts. So I put that letter out. Um, I called it the, I call it the Bitcoin forecast. It effectively takes all these metrics that we get off,

• 53:26Speaker 02

  class node, um, I reprocess it. I add my commentary and predictions based on that. Um, and that's available, um, on, um, Substack currently. So you can just go to my Twitter handle. It's Wu nomik, at Wu nomik, and there's a link there to my Substack and that's available if you want to subscribe.

• 53:50Anthony Pompliano?

  Awesome. Well, listen, thank you so much for taking that time to do this. We'll make sure that there's a link in the description to send people over there. Will, any last closing words?

• 54:00Speaker 02

  Yeah, hang in there, guys. This thing's gonna pop.

• 54:07Anthony Pompliano?

  Will Clemente, anything for you?

• 54:09Speaker 03

  Uh, I just wanted to say, you know, thanks for coming on Willie. Obviously, you know, you know, you're very instrumental in kind of my understanding of all this stuff. It was actually a podcast you did with Peter. I think it was like in, in December or something. It was like right after we broke out all time highs and like just listening to you kind of, you know, explain how everything was moving on chain. It was really fascinating to me. I think, you know, we kind of get insight into activity and investor activity that you, you don't get in any other market. So the stuff really is fascinating and I appreciate you, you know, taking the time out to, you know, communicate back and forth with me and then also just come on. And this is awesome for me. So thanks.

• 54:47Speaker 02

  Yeah, thanks, Will. It's been really great to see you come in there and sort of take the torch. It's like a new generation on-chain analyst coming in and, and helping build up the space. So that's really great to see. Good on you for that.

• 55:00Speaker 03

  Thanks, Willie.

• 55:02Anthony Pompliano?

  Awesome, guys. Thank you guys so much and we'll do it again in the future.

• 55:05Speaker 02

  Okay, catch you later.