#586 Bitcoin Is WILDLY Oversold! 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 strong hands accumulating, NUPL, Illiquid Supply Change, and Short Term Holders Selling ======================= 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 the link to sign-up now: https://www.ambergroup.io/?utm_source=10508 ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Will Clemente is a finance major at East Carolina University. He has quickly become one of my favorite writers on all things Bitcoin, including deep dives on various on-chain analytics. You can subscribe to Will's new email newsletter by clicking on the link in the description. In this conversation, we discuss a variety of different on-chain analytics, what's been going on with the price, who's buying, who's selling, and what Will thinks the on-chain metrics are telling us about the short-term to medium-term future. I really enjoyed this conversation with Will, as I do with all of them, and I hope you enjoy this one as well.

• 0:45Anthony Pompliano?

  Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Revolut. Let's go back to the basics for a second. I've partnered with Revolut, a finance app in the US and the UK that say they're the 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 you'll 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. So sign up now through revolut.com/pomp to get a $15 reward and put them to the test.

• 1:24Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:51Anthony Pompliano?

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• 3:34Anthony Pompliano?

  All right, let's get back into this episode with Will. I hope you enjoy this one.

• 3:37Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 4:06Anthony Pompliano?

  Alright guys, bang, bang. I've got Will here with me. He is on a little trip, so apologies for not getting this out on Saturday. But, uh, Will, what's going on, man?

• 4:16Speaker 02

  Hey, Bob. Uh, not too much. I'm just taking it easy here in Hawaii. Uh, getting a little burnt, trying to get a little tan, but, uh, just taking it easy, man. How about you?

• 4:26Anthony Pompliano?

  Absolutely. The, uh, the price of Bitcoins taking it a little easy as well. Uh, let's just jump right into this. Uh, we can kind of just start out with, it seems like, uh, we've basically continued through this reaccumulation phase, kind of going sideways, and we're really oscillating between like, I don't know, thirty-two, thirty-four thousand dollars and forty thousand. Uh, talk a little bit about the price to get us started.

• 4:48Speaker 02

  Yeah, so, you know, we've been in this range between thirty-two thousand, call it, to, to forty K for, like, well over a month now. Um, and so we, we got that retest of range highs, um, up towards, you know, we almost broke through like forty-one and a half K or something like that, and then, um, we moved back down, and now we just retested range lows this morning. So, um, still sitting in that range. Um, obviously, you know, still until we break out of that range, I think, you know, it's still kind of like a crab market where people are hesitant to, uh, take a directional move. Um, I still think breaking above the, the two-hundred A moving average is, is still really crucial for Bitcoin.

• 5:30Speaker 02

  Um, which, which sits right around, uh, forty-two K, and I think to the downside, uh, a, a big level is, is right around that thirty K mark as well. Um, so aside from price, I think, you know, kind of, in, in the short term, the, the biggest risks to Bitcoin are, you know, obviously the, the legacy system. Um, you know, if, if something happens there, then whatever on-chain data is saying or technical analysis is going to be thrown out the window. Um, I was, you know, very similar to March of last year where, you know, on-chain looked... Somewhat bullish and then you were heading into the halving and then you had a big legacy financial crash and all that stuff didn't matter. And then also, I think the what's going on with China,

• 6:11Speaker 02

  I think they're actually cracking down on the miners. I haven't seen anything. I just checked like 15 minutes before we got on here to see if there was any selling from the miners. Granted, you know, Glassnode might be missing some of these wallets. And then they also can't account for, you know, possibly like executives at these mining companies that, you know, are facing uncertainty or, you know, they're, they're for the, in the short term, they're not going to have any revenue. So I think that that plays in the short term as some selling pressure. And I think, you know, there's not a whole lot of buys here already. And so seeing that, that might be

• 6:54Speaker 02

  to in part due to why we've seen this this drop in the last couple of days. But to be honest, I haven't seen anything for sure in the data I'm looking at. But there's always a chance that some of that isn't being seen.

• 7:05Anthony Pompliano?

  Absolutely. And then you started off the letter that we published on Friday with N U P L. Maybe describe what that exactly is and what you're seeing in that metric.

• 7:14Speaker 02

  Yeah, so N U P L is it's called net unrealized profit loss. So the way it's calculated is you're basically subtracting the market cap from the realized cap, I'm sorry, the realized cap from the market cap. And then you're dividing that by market cap. And so what you can kind of get are these, I guess you could call it sentiment zones for like coddling behavior where, you know, when you're, when you're in the top of a bull market, everyone thinks Bitcoin is going to the moon and, you know, it's hyper Bitcoinization. So people stop selling. And so you get these, what's labeled in New P L is, is these euphoria greed zones. And then when we're in a bear market,

• 7:55Speaker 02

  people are, you know, obviously the sentiment is terrible. So everyone's selling at, you know, the second there's a rally. And so in, you know, conversely, you have these hope and fear or capitulation zones. And so, you know, in the newsletter, I had kind of identified this, this line.

• 8:16Speaker 02

  It it it's between between point six and point eight in the ratio. Uh, but you see, you know, it it's been this kind of inflection point where uh, Newpul has bounced off of that. Um, in between, you know, the twenty thirteen double pumps. Uh, but then also it's served as, you know, if once it breaks that, um, you see a lot more downside. Uh, in in twenty eighteen, once, once it broke through that level, then it was pretty much uh, straight down from there. Um, in terms of, in terms of this metric, so. We're, we're really kind of just sitting on that, um, here. So, you know, this will be something over the next couple of weeks. You'll get a more, um, you know, distinct, um, you know, idea of of where it's going. But for now, yeah, we're, we're sitting at this kind of inflection point in that metric.

• 9:01Speaker 02

  Um, and and that's something that that's, you know, it's supported by a couple of other things, um, that, that we looked at in the newsletter. That we're kind of sitting at this inflection point. Um, another one is Soper, which we've talked about many, many times. Uh, but we've never talked about long-term Soper, which is the same thing as just looking at the, the longer-term kind of howling behavior. Uh, this is kind of like broader cyclical, um, behavior versus, uh, looking at the kind of short-term Soper to gauge, um, you know, very short-term corrections. And once again, we're, we're kind of sitting on this, uh, inflection point where either Soper has bounced off this historically. For example, in, in twenty thirteen or in late twenty seventeen, um, or I'm sorry, in, in late twenty sixteen.

• 9:44Speaker 02

  Uh, but also has served as, uh, resistance, for example, you know, at the end of the twenty thirteen bull market, the end of the twenty eighteen. Uh, and then as well in twenty nineteen, when you kind of had that rally that was driven by the, the plus token policy.

• 9:57Anthony Pompliano?

  When you think about, uh, M V R V, uh, the, just the simple ratio of market cap to realized cap, what's that telling us?

• 10:05Speaker 02

  Yeah, so, um, the realized cap is something that I think we've talked about a few times. Um, it's basically the, the market capitalization, but it's instead based off of when the coins, um, were last moved. Uh, this is something that was, uh, kind of conceptualized by Pierre Richard and then was really, uh, created by, by Nick Carter. But the N V R V ratio was created by, uh, Murad and David Poel. And so it's a very simple ratio of market cap to realized cap. And so, you know, when I ran a 21 day moving average, just to kind of smooth it out. And once again, you were kind of sitting at this inflection point where, you know, this has served as support in

• 10:45Speaker 02

  early 2013, between the 2013 double pumps, late 2016. And then also towards, you know, when we had that that drop in in late September last year, right before the bull market really kicked off. I'm sure some people remember that correction. Because for me, that was like my first big correction because I got into Bitcoin in in late August. So I remember that one, that one pretty distinctly, but it's also served as resistance. You know, for example, after 2013, after 2018, and then also right before the the March crash, which was interesting. But, you know, this is another thing where we're kind of just sitting at this inflection point here. And and over the next couple of weeks, you'll get you'll get a better, you'll get a better, I guess, gauge of of where that's going.

• 11:30Speaker 02

  So I think, you know, kind of the the key takeaway between these metrics is that we we are sitting at, you know, this inflection point. And over the next couple of weeks, I think are are very crucial in terms of in terms of kind of the directionality of of where we're headed. Granted, you know, I I what I'm seeing in the in the short to midterm is is looking bullish slightly. But, you know, the the suffering, we'll just have to watch over the next couple of weeks to kind of gauge the broader trend.

• 12:00Anthony Pompliano?

  And when you're talking about an inflection point, just for those that are listening or watching, what you're really talking about is we're kind of in this gray zone. We don't know if there's going to be a breakout to the upside or a breakout to the downside. But definitely kind of going sideways here, there's going to be a breakout in either direction. The next couple of weeks is when we'll kind of find that, which leads us to, you know, there's people selling, whether it's because of uncertainty or realizing losses, but they seem to be all short term holders. Talk a little bit about that.

• 12:26Speaker 02

  Yeah, so I think this is something we've talked about like the last, you know, two weeks. And this is, I guess, you know, a process that it's it's going to take longer to kind of play out than you would think. Um, you know, possibly over, it might even take another couple of weeks from here. Um, uh, but what we're really seeing is that all the coins that are being sold are from very young wallets. Um, so Glassnode can separate these using heuristics into uh the wallets or or entities um that are short term or long term. Once they cross a certain threshold, they're labeled as long term, which is, I think, one hundred fifty five days. Uh, but a lot of the selling has has come from those short term holders.

• 13:05Speaker 02

  Um, and then also another way to look at this, and this is what I threw in the in the newsletter, is dormancy, which has been trending down for months now. But um I think, you know, the key thing to look at here is that the the short term holders, um, and this is a, this is a process that that started last week. Um, have have now been offset by the long term holders buying, which I think is is key to look at that. You know, the the short term holders had been offsetting the selling from the long term over the last, you know, call it, uh, you know, three, four weeks ago. But now that's starting to rotate back into the favor of long term holders. I think they're offsetting them by uh. Five thousand three hundred and thirty seven is what I put, um, when we put the newsletter out. It might have changed because it's been a day later, but uh.

• 13:48Speaker 02

  That, so you're starting to see that that rotation back into into long term, uh, which is of course a good thing. But, you know, one, one thing, uh, conversely to kind of, you know, the the bearish narrative is that we haven't seen any new whales. Uh, I think seeing seeing new whales is something that um we're gonna, we're gonna kind of need to uh. Keep, keep a uh seven hundred billion dollar asset afloat, uh, moving up. Uh, so, you know, we we've really seen predominantly like longer term market, uh, I mean, in experienced market participants, um, doing a lot of the buying. But we haven't seen any new large entities coming on chain that would necessarily represent perhaps, you know, institutional buying or something like that. Uh, so that that that's something that I'm keeping a close eye on.

• 14:33Speaker 02

  Because I think Bitcoin is beyond the point where retail can reasonably sustain this asset granting on like people like to throw out those statistics of like if everybody in the world bought $10 of Bitcoin it would go up but I I just don't think that's realistic. So yeah, I at this point, I think you're gonna you're in the need of at least an uptick in the short term of of those new whales coming on chain to really start to see a dramatic price reversal, which that's been trending down for a month or two. So perhaps, you know, that has to do with institutional buying coming in late summer. I know like Nightdig is doing some stuff there. So well, you know, that's something once again we'll have to just keep an eye on, but that is still trending down. We still haven't seen a big substantial uptick in in new whales coming on chain.

• 15:16Anthony Pompliano?

  For sure. One of the ways that you've talked about this in the past is kind of exchange flows. And I know that there was a change there over the past week from the last few weeks. What was that change?

• 15:26Speaker 02

  Yeah, so you know, when we had that big sell off, we had a lot of coins that were just kind of puked out, right? And one of the ways to to note that was obviously the the price drop, but I've seen coins, you know, swaths of coins coming on on the exchanges. But but that's kind of reversed over the last, you know, week or so. I think exchanges, when I wrote this, were down about, you know, a little over 15,000 BTC. So the metric that I threw in there is called exchange net position change. And so that is is this 30 day change of the exchange balance from 30 days ago to now. And that had, you know, that had been going way up as as we sold off. But it has been trending down over the

• 16:09Speaker 02

  last two, three weeks, but now finally it moved into the the red zone. So what they're showing, they're showing negative exchange flows, which of course is showing accumulation because people are moving coins off of exchanges, perhaps, you know, either into wallets or, you know, some kind of custody solution probably for institutional buyers. But that that has flipped into what what resembles accumulation.

• 16:37Anthony Pompliano?

  Got it. And then this also, I think, leads into kind of this illiquid supply change, right? And so talk a little bit about that.

• 16:43Speaker 02

  Yeah, so yeah, that's something we threw in last week, and we had been kind of tracking the trend of this had moved down into, um, supply had been moving into, you know, becoming becoming highly liquid um, throughout the sell-off, but then had slowly been trending back into a liquid. Um, so so this is looking at, you know, kind of a, I guess you could say, strong, uh, long-term holder, I'm not long-term holders, strong hands, right? Um, and so over the last couple of weeks, it's been trending back up into the illiquid zone, um, which is what you'll see the green bar in the newsletter, or if we throw the pictures in here. Um, but you had this big uptick, um, in green, and and since I wrote that the last three days,

• 17:26Speaker 02

  um, you've had, you know, substantially higher and higher upticks in that. Uh, so that's another thing that that's resembling accumulation as well.

• 17:34Anthony Pompliano?

  Got it. And then long-term holder net position change. Um, that seems to continue to be going up as we've seen over the last few weeks.

• 17:42Speaker 02

  Yeah, that's that's just really, um, another way to look at what we had been talking about that the long-term holders are adding. Um, which it it's it's it could be considered bullish, or some people can view this as as bearish, to be honest, because you you you see generally that long-term holders scale out, um, in in the bear, in the in the bull market, but then they buy heavily in the bear market. Um, but at the same time, you also had this this, um, dynamic that we're seeing where long-term holders are stepping in and setting the floor. Um, that that also took place between the 2013 double pumps and then also in in late 2016 as well. Um, so it's not necessarily, um, some people are saying this is this is a bearish thing,

• 18:27Speaker 02

  that long-term holders are starting to accumulate. Um, but I I don't see it that way because they also stepped in, um, towards, you know, the middle of of the last two, uh, bull markets and and kind of set the floor for the continuation back upwards. Um, so yeah, this is something that I'm tracking, um, what we had mentioned that that the long-term holders are now. Offsetting the selling from the short term. I think, you know, that that's a good trend to to follow. But, you know, I think the key takeaway here is that Bitcoin is, you know, deeply undervalued um in the eyes of of mark, you know, experienced market participants and and they're starting to, you know, buy discounted BTC. So I think, you know, when you're when you're in an asset like this, um you should watch the people that have been in for a long time.

• 19:11Speaker 02

  Um, you know, what what they're doing, how they're behaving. Um, and this is showing in aggregate, um, but the people that have been in the market the longest are buying right now very heavily. And and the people that have gotten into the market recently, they're selling. So I think, you know, that's a that's a an interesting thing to note. Um, but, you know, this is, once again, like this accumulation process um may take several weeks to play out, you know, it may be something that we were continued through this reaccumulation phase, you know, through perhaps mid-July. Uh, I don't know if it'll take that long, but um it's not out of the cards. I do still stand on the fact that, you know, we're kind of in this latter half of the reaccumulation phase. Where now we're starting to see things um flip into, you know, it's not like bullish, we're going to a hundred K tomorrow, but

• 19:55Speaker 02

  um it's starting to flip into um what looks like strong accumulation and it's still trending in that direction. Haven't seen anything that uh is showing any any stop in that in that change. Um, where, you know, we we saw the opposite of that trend into, you know, the the bottom of that correction, but now, you know, the last couple of weeks and especially um in the last week, we're starting to see what looks like um, you know, strong accumulation and and it'll be something to keep an eye on into next week. Uh, but I, you know, I think um perhaps I have no idea about the the short term price action in the next, call it week or so. But I think, you know, over the over the next couple of weeks, you you are going to start to see, uh, you know, more more slightly bullish price action because you you're starting to see um, you know, really strong accumulation here.

• 20:39Speaker 02

  And and that's that's just trending upwards.

• 20:43Anthony Pompliano?

  Absolutely. The last thing I want to talk about is the N V T signal, which Willie Wu, I think famously created. Just explain what this is and then kind of what it's showing right now.

• 20:53Speaker 02

  Yeah, so N V T is like a, it's a very simple ratio of the market cap to the on-chain transactional volume. And so Willie Wu, to be honest, I'm not sure exactly what he did here in this, in this new chart that he put out, but he created some, some kind of oscillator. You have to ask Willie about that. But from, from this oscillator that he created, we're, we're, you know, in the deepest correction since, it looks like since after the, the 2011 pump, the bull market, and then also after the 2017 bull market. So, you know, in, in on-chain terms, Bitcoin is deeply oversold. Anybody who uses like an RSI or something like that, it's, it's very similar. The oscillator is, you know, beneath what you would call, you know, the range that, that it's been trading in.

• 21:38Speaker 02

  So I think, you know, you know, key takeaways is, you know, in the short term, I don't know if we'll have another leg down to perhaps, you know, retest that 30K range. But it, you know, Bitcoin is, is undersold and, I mean, oversold in, in terms of, you know, on-chain, especially that, that N V T. But you're starting to see long-term holders step in and, and, you know, take advantage of that discounted BTC. And then also we're starting to see, once again, you know, following up on last week, continued accumulation. And I think, you know, at this point, it may just, you know, be another couple of weeks. But, you know, I still stand strong on the fact that we're not in, in a bear market. You know, one other thing to note that also kind of resembles that we're in a bull market and not a bear market

• 22:23Speaker 02

  is the new users coming on-chain. So, you know, after, after the 2017 blow-off top, you saw new users pretty much dropped off a cliff. But what we're seeing now is that Big spike in new users, which are perhaps, you know, attracted by, you know, cheaper prices. But I would like to see perhaps, you know, like a geographical breakdown of maybe how many of those new users are coming from Latin America. I think that would be interesting. But nonetheless, you are seeing this big spike in new users coming on chain. And so, you know, that's another thing that resembles that we are in a bear market.

• 22:58Anthony Pompliano?

  Absolutely. Yeah, I think the big takeaway is here, right? Is everything on change shows that the long-term holders are buying from short-term holders. It's heavily oversold. It seems to kind of be going sideways in this gray area where it's either going to break up or down, probably with some level of violence of action. And the next couple of weeks are very crucial. But we do see still a lot of the on-chain metrics pointing to something that looks highly, highly bullish over the medium to long term. So this is great work. Anything else you want to leave everyone with?

• 23:33Speaker 02

  Yeah, so, you know, I just wanted to just touch on, just kind of reverberate. You know, this stuff isn't going to mean that price is going to go up in the next couple of days, perhaps. You know, this is on-chain necessarily, and this is something I see on Twitter a lot, like, people commenting that, and not just to me, like Willie Wu or these other guys, you know, Checkmate.

• 23:52Speaker 02

  This stuff is perhaps going to take longer than you would expect to play out. But the point is, is that, you know, in my eyes at least, I don't want to speak for them. I know Willie agrees with me on this too, but like, we, we, we're not resembling anything in a bear market in terms of on-chain. So, you know, this stuff is perhaps going to take weeks to play out, but it's not, it doesn't mean, you know, okay, we're starting to resemble, you know, slight accumulation on-chain, you know, price is going to go up tomorrow. This is stuff, you know, you just have to be patient. It's going to take a few weeks, in my opinion. But yeah, other than that, you know, I'm doing the newsletter with Pomp for everybody listening. And then, you know, I have my own channel that we're going to start to rotate

• 24:34Speaker 02

  the Friday newsletter too as well, which goes out on a BTC by WC3.substack.com. And I put out, you know, a weekly update on there as well with Pomp, but that'll be moved to my newsletter eventually as well. So if you're interested in this stuff, it's free, so make sure you sub to that. But otherwise, man, I'm looking forward to keeping track of this stuff for you and I'll touch your base next week.

• 25:00Anthony Pompliano?

  Absolutely. Thanks so much for doing this, Will.

• 25:02Speaker 02

  Thanks, Bob.