#813 Bitcoin Bounces Back To $40k - BTC On-Chain Analytics

In today's episode, I break down Bitcoin On-Chain Analytics. I'm usually joined by WiIl Clemente on Saturdays to discuss his research through articulating his weekly newsletter. Unfortunately, Will was unable to join us this week. Instead, I go through the Blockware Newsletter to help you understand why Bitcoin crashed this week and what you should do during a crash. This on-chain breakdown was streamed live on the "The Best Business Show." To see the video with the corresponding charts referenced throughout the interview, go to my Anthony Pompliano YouTube Channel ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= Cryptocurrencies offer boundless potential, but how will you protect your crypto? Arculus is the next generation crypto cold storage wallet that combines the world’s strongest security protocols on the Arculus Key Card with an easy-to-use Arculus Wallet App. With over 20 years of experience developing leading-edge secure payment technologies, CompoSecure created Arculus to give you the power to protect your financial future. You can buy, store, swap, send and receive your crypto with a simple tap of your Arculus Key Card to your mobile device. Your private keys are encrypted on the Arculus Key Card and they never leave it. Stay safe from hackers with no cords; no charging; no Bluetooth. The only person accessing your crypto... is you. Buy yours at Get Arculus.com today ======================= Today’s episode is brought to you by Coinbase Wallet, your key to the world of crypto. Crypto wasn’t made to just buy, sell, and hodl. With Coinbase Wallet, you can do so much more: Collect more NFTs, earn more with DeFi, and trade more than 4,000 tokens. Whether you’re looking to play, stake, spend, or just explore a trending new protocol — Coinbase Wallet is your key to more. Long-time HODLers already know that wallets are a must-have if you want complete control of your crypto. That’s why Coinbase Wallet makes self-custody simple, while providing the safety and security of the most trusted name in crypto. Visit coinbase.com/wallet to learn more. =======================

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. In today's episode, Will Clemente couldn't join me for our weekly sit-down, so instead, I just break down all of the charts that he put together. We try our best to go through the on-chain metrics and explain what the hell is happening with Bitcoin and why has the price been falling. I hope that you enjoy this and please bear with me, as obviously, I'm nowhere near as astute in these metrics as Will, but I'm doing my best to keep up. So, before we get into this episode though, I want to quickly talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync across all

• 0:46Anthony Pompliano?

  of your devices, making it easier to send, receive and exchange over 150 or more crypto assets in one place. And with world-class customer service available to you 24/7, Exodus always has your back. But the fun doesn't stop with staking and trading. They recently launched a new NFT marketplace where you can buy and sell your favorite NFTs on the Solana network. By partnering with the popular NFT platform, Magic Eden, they're offering the full Monty Unverified Collection, with more added every single day. Ready to check it out for yourself? Run, don't walk. Over to exodus.com/pomp for your free download today. Again, if you want the world's leading desktop, mobile and hardware crypto wallet, go to exodus.com/pomp today.

• 1:28Anthony Pompliano?

  Today's episode is brought to you by Arculus. Cryptocurrencies offer boundless potential, but how will you protect your crypto? Arculus is the next-generation crypto cold storage wallet that combines the world's strongest security protocols on the Arculus keycard with an easy-to-use Arculus wallet app. With over 20 years of experience developing leading-edge secure payment technologies, CompuServe created Arculus to give you the power to protect your financial future. You can buy, store, swap, send and receive your crypto with a simple tap of your Arculus keycard to your mobile device. Your private keys are encrypted on the Arculus keycard and they never leave it. Stay safe from hackers with no cords, no charging, no Bluetooth. The only person accessing your Crypto is you. Buy yours today at getarkulus.com.

• 2:14Anthony Pompliano?

  Today's episode is brought to you by Coinbase Wallet, your key to the world of crypto. Crypto wasn't made to just buy, sell, and hold. With Coinbase Wallet, you can do so much more. You can collect more NFTs, earn more with DeFi, and trade more than 4,000 tokens. Whether you're looking to play, stake, spend, or just explore a trending new protocol, Coinbase Wallet is your key to more. Longtime holders already know that wallets are a must-have if you want complete control of your crypto. That's why Coinbase Wallet makes self-custody simple while providing the safety and security of the most trusted name in crypto. Visit coinbase.com/wallet to learn more. Again, coinbase.com/wallet to learn more.

• 2:54Speaker 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.

• 3:17Speaker 02

  What's up, everyone? Bang, bang. Will Clemente and I didn't get a chance to sit down this week as we usually do for our weekly conversation, so I'm going to break down a couple of the charts that he included in his weekly Blockware email. First, let's take a look. There's been a three-month-long downtrend dating all the way back to November for Bitcoin's price. It recently went ahead and broke out of that. Now, that doesn't mean that we're in the clear. There's still a number of different resistances that we need to claim, the first being right around $40,700, but then we've got to get to $47,000. Both of those important numbers in terms of Bitcoin continuing in a bull market momentum. Then if we jump and we look at the open interest, what we can see is that Bitcoin's price has been drawing down over the last three months, but that open interest has remained relatively high.

• 4:01Speaker 02

  Normally, when price draws down, you'd expect that there would be a wipeout of the open interest. We haven't seen that. And so that could tell us one of two things, either there's still some leverage in the system, or what's more likely is that there's some leverage, but it's on the short side, that people could be hedging their positions and therefore it's worth paying attention to. Not something to be fearful of yet, but definitely not what you You would expect when the price gets wiped out the way that it has. Then if we jump all the way and we start looking at actually the open interest using Bitcoin as collateral. What we can see is that traders have been switching out their Bitcoin that used to be used as collateral for stable coins. Now, this is important because ultimately if they're using Bitcoin as collateral, it's got this negative convexity to it.

• 4:39Speaker 02

  There's a very high probability that you could see kind of these washouts, these liquidations where price goes down very, very significantly, very, very quickly. But now, all of a sudden, when you start to actually migrate from Bitcoin to stable coins in those margin contracts, is a much healthier backdrop for the market, for the market structure from a macro perspective. You would expect in these situations to have less volatility to the downside. Stable coins are stable, hence the name stable coins. And so Bitcoin as collateral ends up being a little bit more risky from a price standpoint. If we then jump and we'll break down the on-chain metrics using the entity adjusted ASO metric as a seven-day moving average. And what is showing here is that the younger and younger the coin is, the more likely it is being sold.

• 5:23Speaker 02

  And so this is exactly what we saw in 2021, basically from February and March, all the way through the summer till July and August. We saw a big price drawdown and all it was, was the short-term holders, those people who had just bought Bitcoin, the weak hands. They were turning and they were selling, they were dumping their coins in the market. And they're being bought up by the people who have been around, the veterans, the strong hands. And that's what we continue to see here in this metric. Then if we jump and we actually look, well, what the hell are the short-term holders doing? These are people who have held Bitcoin for less than 155 days. What you can see is that the short-term holder realized price continues to trend down. That means that those coins that were previously bought at higher prices are now being sold at a loss. The short-term holders have weak hands, they're selling their coins at a loss and they're getting out of the market.

• 6:09Speaker 02

  Then if we go and we look, well, the short-term holders are selling, what are the whales doing? As you would expect, the whales are gobbling up as much Bitcoin as possible. They continue to accumulate more and more and more. And we can see that those whales, every time they start to buy, in the past, we have seen a massive price increase in the future. History not, may not necessarily repeat, but it It is important to understand short term holders are selling and whales are accumulating right now. And then if we go ahead and we look at the mayor multiple, what we can see is that this metric, which compares the Bitcoin price relative to the 200 day moving average, the potential upside far outweighs the potential downside. You've probably seen Will Clemente tweeting about this tons and tons and tons online. It's something he's got pretty deep conviction in,

• 6:51Speaker 02

  and I tend to agree with him that using all these various metrics, that the asymmetry available in Bitcoin today is more likely to the upside than it is to the downside. And then lastly, we can look at dormancy flow. We've seen everyone from fidelity to Will and Blockware and other analysts all talking about this dormancy flow. And the reason is that it recently reached the fourth lowest value in Bitcoins here, uh, history. So the fourth lowest value in Bitcoins history for dormancy flow. And so if you think about asymmetry, it is very unlikely that we get in a situation where it's so oversold that there's still so much asymmetry to the upside. And so it's hard to be bearish here. But again, all these metrics are individual data points. They don't necessarily make up a true story. They don't necessarily make up the

• 7:34Speaker 02

  full story. You've still got to be able to do your own research. This is not financial advice from Will, from Blockware or myself, but understanding what these metrics are showing you, understanding what they've meant historically, tech, understanding what they've meant historically, puts together a really compelling photo, puts together a really compelling picture of where the market is now. Whenever there's tons and tons of fear and the on-chain metrics are this bullish, as we saw during the summer of 2021, usually it ends up turning out pretty good for the people who can control their emotions, who can keep a long time horizon view and can simply chill out. There's lots and lots of fear in the market, but ultimately Bitcoin just continues to

• 8:17Speaker 02

  produce block after block after block of transactions. And all of these underlying fundamentals, they're really damn bullish. I hope that you guys enjoyed this breakdown. If you haven't already subscribed to the Blockware newsletter or follow Will on Twitter, I highly suggest you do both. You can find links to his Twitter or to the newsletter in the description below. And we'll be back next week with me and Will both talking about on-chain metrics, all the derivatives and the macro environment every Friday. And so I hope that you'll join us then. Until then, I'll see you guys next week. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job.

• 8:58Anthony Pompliano?

  In the Bitcoin or crypto industry, we've got you covered. Head over to pompscryptocourse.com. We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to pompscryptocourse.com to learn more and I'll meet you guys for the next episode.