#706 Major Bitcoin Buying Is Going On Right Now w/ Will Clemente

Will Clemente is the Lead Insights Analyst at Blockware. He has quickly become one of my favorite writers on all things bitcoin, including deep dives on various onchain analytics. In this conversation, we discuss the bitcoin fundamentals, on-chain metrics, what happened in the past week, and what the on-chain data is telling us to be prepared for moving forward. ======================= If you haven’t started building your crypto portfolio on Okcoin, there’s no better time. They’re one of the fastest growing global exchanges around and they have some promotions happening right now to help even more people be part of the future of finance. If you have an account already, you can split $100 in BTC with a friend when you invite them to sign up for Okcoin if they buy $100 of crypto in the first month. The more friends who sign up and buy, the more BTC you get. And I always recommend dollar-cost averaging as a way for investors to have more control over their average price when building their portfolio. Now you can automate dollar-cost averaging with completely fee-free daily, weekly, or monthly recurring buys on Okcoin until November 1. That’s no fees at all on your purchases until the holidays. Get started on the web or on their new super easy-to-use app at okcoin.com/pomp ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 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. ======================= AppSumo is the leading digital marketplace for entrepreneurs, and a great way to get your product in front of 1M+ entrepreneurs, founders, and small businesses. AppSumo is giving away their entire $1 million Black Friday marketing budget to creators. If you have an ebook, online course, template, or any other digital product — this is for you. List your product on AppSumo between September 15th - November 17th and the first 400 offers to go live will receive $1,000, the next 2,000 to list a product and go live get $250. And everyone who lists gets entered to be one of 10 lucky winners of $10k! Go to AppSumo.com/pomp to list your product today and cash in on this amazing deal.

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 the Lead Insights Analyst at Blockware. He's quickly become one of my favorite writers on all things Bitcoin, including deep dives on various on-chain analytics. In this conversation, we discuss the Bitcoin fundamentals, the on-chain metrics, what happened this past week, and what the on-chain data is telling us to be prepared for moving forward. I really hope that you enjoyed this conversation with Will, as I always do. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is AppSumo. AppSumo is the leading digital marketplace for entrepreneurs and a great way to get your product in front of one-plus million entrepreneurs, founders,

• 0:47Anthony Pompliano?

  and small businesses. AppSumo is giving away their entire $1 million Black Friday marketing budget to creators. If you have an ebook, an online course, a template, or any other digital product, this is for you. You can list your product on AppSumo between September 15th and November 17th, and the first 400 offers to go live will receive $1,000. The next 2,000 to list a product and go live get 250 bucks, and everyone who lists gets entered to be one of the 10 lucky winners of $10,000. Go to appsumo.com/pomp to list your product today and cash in on this amazing deal. Again, appsumo.com/pomp, or you can click on the link in the description as well, appsumo.com/pomp.

• 1:29Anthony Pompliano?

  Next up is Gemini. They're a regulated cryptocurrency exchange wallet and custodian. Some might say they're actually an industry-leading regulated cryptocurrency exchange wallet and custodian. That makes it simple and secure to buy, sell, store, and earn Bitcoin Ether and over 40 other cryptocurrencies. They offer an 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 3 minutes at gemini.com/pomp and get $20 of Bitcoin after you trade $100 or more within the first 30 days. Again, takes 3 minutes when you go to gemini.com/pomp and you'll get $20 US dollars of Bitcoin after you trade. $100 or more within 30 days.

• 2:13Anthony Pompliano?

  Gemini.com/pomp. What are you waiting for? Let's go. Last but not least is OKCOIN. If you haven't started to build your crypto portfolio on OKCOIN, there's no better time. They're one of the fastest growing global exchanges around, and they have some promotions happening right now to help even more people start being a part of the future of finance. If you have an account already, you can split $100 in Bitcoin with a friend when you invite them to sign up for OKCOIN. If they buy 100 bucks of crypto in the first month, you invite them, they buy $100 of crypto, you both split a free $100 from OKCOIN. The more friends who sign up and buy, the more Bitcoin you get. And I always recommend dollar cost averaging as a way for investors to have more control over their average price when building their portfolio.

• 2:58Anthony Pompliano?

  Now you can automate dollar cost averaging with completely fee-free daily, weekly, or monthly recurring buys on OKCOIN until November 1st. That's right, those automatic dollar cost averaging purchases are completely free of fees, whether you're doing it daily, weekly, or monthly, until November 1st. That's no fees at all on your purchases until the holidays. Get started on the web or on their super easy to use app at OKCOIN.com/pomp. Again, OKCOIN.com/pomp. All right, let's get this episode with Will. I hope you guys enjoy this one.

• 3:32Speaker 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.

• 3:55Anthony Pompliano?

  Let's start with the newsletter. In terms of the future perpetual funding rate, you're going to have to explain to people what exactly this is, and then kind of what this is telling you in terms of what we're seeing from price standpoint.

• 4:07Speaker 02

  Yeah, so this is, this is a Tradinglight, which is one of my favorite platforms. And just so like people know what's going on price action like in the last like 10 minutes. It's showing you is the price, you know, the active market price moving more towards the bid or the ask. So it's basically showing you are buyers or sellers more aggressive in the market. And so, you know, that in combination with the volume is basically showing you there's an aggressive buyer on Coinbase right now. So that's, that's just what's going on in like the immediate term.

• 4:37Anthony Pompliano?

  And so that's what's driving kind of this quick price increase is that there's some major buyer on Coinbase scooping up Bitcoin.

• 4:43Speaker 02

  Yeah, well, yeah, we call it T whopping where they're basically, you know, like averaging in, you know, a large buy, right? You can't just fat thumb a large buy, which by the way, I mean, speaking of fat thumbing, that price action yesterday was pretty funny. Where we had someone basically just like market selling this really fat or liquidated like 46 million or $47 million of longs. And then we just continued right up. It's a complete scam price action. It's been, uh, it's been, it's been some weird, some weird PA over the last two days. Yesterday, like I said, we had that big seller and now it looks like we have some aggressive buying on Coinbase. But yeah, for listeners like Tradinglight is awesome.

• 5:23Speaker 02

  You can go in and look at per exchange, basically like this heat map of all the bids and asks and then overlay some of these other indicators. But anyway, we can get into the newsletter. I just wanted to, to share what was going on right this second.

• 5:34Anthony Pompliano?

  Okay, let's start with the futures perpetual funding rate. What exactly is this and what's it telling us?

• 5:39Speaker 02

  Right. So the funding rate is based on the delta between the spot price and in the mark price, which is, you know, different on each exchange. So you're looking at the weighted average of all the spot exchanges versus what the actual perpetual swap contract price is trading on. And so this, what you're looking at is the aggregated version of this. But what you want to look for with funding is not necessarily the fact, I think there's this misconception that when you have positive funding, that it's, that it's always bearish and that's not the case because it, it can just be the, the price of, of doing business at the time, right? If, if the market's trending bullish, then that's just the cost of doing business and it. In a bullish market and you know, contrarily, you know, if if you're in, you know, bearish market, that's just kind of the cost of doing business.

• 6:24Speaker 02

  Or if you have a large liquidation cascade that can drive the perp contract lower than spot. Um, and you can have negative funding where I think funding is really a good tool is when you have these dislocations between the trend of it and price. Um, and so a really good example of this was right after we broke all time highs. That really big, uh, little cluster that you see on the left hand side. That's uh, funding mooning up to like a hundred fifty percent APR on some exchanges. Um, which is, you know, obviously a bit concerning in itself, but where you really would would be concerned. Um, was in that's that second kind of spike on the right hand of uh, right hand side of of that first cluster. And the reason is because price is grinding down while funding is rising.

• 7:08Speaker 02

  And so essentially what that's saying is the force that the perpetual swap, you know, traders are exerting. So they're they're leveraged longing as price is going down. So they're basically getting, you know, getting faded by what the spot market is doing and that's that's a huge red flag. Um, and so if you remember a long time ago, like at the end of summer, we called this big short squeeze off of the lows. And it was the complete opposite setup. Uh, price was rising, funding was going the opposite. And so using these dislocations can give some good signal about what happens in in the market. Um, and over the last couple of days on Wednesday, I think it was Wednesday night. Um, you had this another dislocation where price was grinding down, funding was rising and that was a big red, big red flag.

• 7:51Speaker 02

  Um, you also had open interest, uh, spiking and in particularly, uh, in particular, the coin margin contracts. So we look at, we talked about this last week, the coin margin, uh, versus the stable coin margin. And why, you know, why there's more convexity to the to the coin margin. Uh, because you know, as price goes down, you're not only, you know, your P and L is decreasing, but you're less collateralized. So that's another, another thing to look at is the coin margin open interest. Um, you can also look at liquidation levels. So I'd like to look at high block is a really good platform for that. You can see where the liquidations are. So you can say, okay, if price goes down to, you know, X level, then. You know, you have a large cascade. And so whales can see this information too, right?

• 8:31Speaker 02

  And so that's why, you know, you have things like what happened yesterday where it basically looked like someone was kind of stopped loss hunting in a sense of they were trying to trigger a cascade. You know, perhaps buy in cheaper or they went short and then triggered the cascade, right? And so looking at some of these things can kind of give you some insight into, you know, when traders are kind of getting off sides and when they're in, you know, when they're leveraged doing so. You know, that that was a, that was like a pretty, you know, red flag to me on, on, on Wednesday. But, you know, we flushed a bit of that leverage out.

• 9:01Anthony Pompliano?

  So, so we have another chart here that's got your tweets overlaid on it, which like to me is, I know you're getting better at this stuff and you're constantly learning because now you're starting to time some of this and really understand how the underlying fundamentals and the on-chain metrics are interfacing with price. And on this graphic, what we have is we've got three tweets of yours. The first one says that the market cap O I is rising plus positive funding. Then basically you say, hey, price is grinding down and funding is rising. FYI, kind of giving a little bit of a warning. And then you've got that buy bit funding at a very high level. So maybe walk us through here.

• 9:35Anthony Pompliano?

  You know, how accurate is this stuff? And like, how do you think about what you're calling out versus some of the, the price action that we're seeing in more of like the short term versus the longer term on-chain stuff that I think, you know, most people assign value to on on-chain?

• 9:50Speaker 02

  Yeah, totally. Like in the short term, there's just so much liquidity in the derivatives market, especially the perpetual swap market, that price is really driven by it in the, in the, in the shorter term. In, in the longer term, I look at on-chain as kind of the, oops, as kind of the, the macro, right? And, and so, you know, when you're trying to look at what's going to happen over the next couple of days, on-chain really isn't the best. Oh, we're getting some nice little price action here. On-chain isn't necessarily the, the best tool for what's going to happen in the extremely short term. And so for that, like I said, you look at the derivatives data. And so, you know, I just threw over, not to necessarily show myself, but just to show how the, the concept, like remove me from it, just look at the concept itself and, and how it's played out.

• 10:33Speaker 02

  So like on the left, you know, you're looking at open interest as a Percentage of market cap rising. Meanwhile, you had funding increasing as as price was decreasing. Same setup after all time highs. And then once again, the same setup on the right hand side. But on the right hand side, another thing to throw in, I forgot to mention a second ago, was you can also look at funding a bit more granularly. You can look at the individual exchanges. So you can look at like, you know, what's what's Bybit funding doing, you know, what what's Binance, Binance funding? And then you can go a step further and say, well, you know, what's Bybit coin margin funding? What's Bybit USD margin funding? And so on the right, what you'll see is I was comparing Bybit and Binance,

• 11:17Speaker 02

  which tend to have a lot more retail action compared to FTX and Derbit, which this is a bit of a generalization, but it tends to be a bit more of the the smarter money participates on those exchanges. And so when you see dislocations between like Bybit, Binance and Derbit and FTX, that can be a little, a bit of a signal as well. That was ironically also another signal when we called that short squeeze at the end of the summer. Same thing in reverse. It was that you had, you had FTX and Derbit had really high funding, but Bybit and Binance were actually had really low funding. So it's the complete opposite setup where you had, you know, Bybit and Binance actually shorting, while FTX and Derbit, you know, they were longing. So it's opposite setup here.

• 12:01Speaker 02

  But it's just another, you know, you can get a bit more granular in terms of like, how you're analyzing, you know, where where the positioning is in the derivatives market.

• 12:10Anthony Pompliano?

  So when we look at the futures open interest, you obviously have like what I would consider the more regulated or traditional places like CME versus obviously Bybit, Binance and the like. There's way less leverage in the legacy system than there is on some of these crypto exchanges. We've got this chart that shows just an explosion of open interest. What do you read into this?

• 12:31Speaker 02

  Yeah, I mean, this is mostly in due to the, you know, to the Bitcoin futures ETF, the ProShares ETF, and just the demand for the futures contracts from CME. And so that, you know, the reason I, the reason I threw this in is, A, now CME is the largest. Futures exchange, which was previously Binance, but they actually got surpassed by CME this week. And that's important to understand because when you're looking at, you know, usually we like to look at in the Bitcoin market, high open interest is almost always a, you know, a precursor or kind of a warning signal to be wary of, okay, we're building up a fair amount of, you know, leverage in the system, right? But, you know, when you look at what CME, like you mentioned, CME doesn't have nearly

• 13:16Speaker 02

  the leverage that like Binance offers, right? And so I think like, you know, on CME, you're looking at like one to two X leverage, you know, at the most versus on Binance, you're talking like, you know, people getting up to like 20, 50, 100 X, you know, at the very extreme. And so I just think this is important to kind of keep in account when you're looking at things like, you know, I look at like market cap, you know, related to open interest. So the, you know, how large open interest is relative to market cap to kind of gauge, you know, what usually has been a gauge of how much leverage there's been in the system. But it's just, you need to be wary of now that, you know, CME is the largest, you know, futures exchange that that's not necessarily as bearish of a signal as it has been.

• 13:59Speaker 02

  It's just something to keep in mind because, you know, there isn't that as large of a, you know, amount of, amount of leverage on, on CME versus some of these other exchanges.

• 14:10Anthony Pompliano?

  So we talked in the past about this idea of these same contracts being collateralized with Bitcoin or crypto. And the whole idea of the collateral ends up being that we want as little of it being collateralized by Bitcoin, right? And we actually, when it gets higher, you get a little nervous and there's a whole bunch of reasons why. But what we've seen over the last couple of days, or really the last couple of months is that we continue to go down, but there was like a little bit of a spike over, over the last week or so. Like, how do you read into this? And do you get worried about these little spikes on this chart here that you can see at the end of this like orange line? Or do you not worry about kind of the, the smaller moves?

• 14:49Speaker 02

  Right. So in the, in the short term, like when we were talking about a couple of minutes ago about, you know, how to kind of gauge leverage in the system, one of the things I mentioned was looking at the Coin margined open interest. So if you look at something, if you look at a platform like Coin Alize is a great one. You can look at side by side the stablecoin or you know USD margined contracts or open interest. Measured against the actual coin margin. And so what this is doing is this is just looking at what's the percentage of all of the open interest that's specifically just coin margin. And so, yeah, like these short term spikes can can, you know, be a bit of a red flag when you pair it with some of the other things. I'm not going to rehash the whole thing, but you know what we mentioned five minutes ago.

• 15:33Speaker 02

  In terms of like, okay, are we like building up a little dislocation of leverage in the system? Maybe we get a flush out, right? But what what I'm really trying to paint a picture here was just the broader, the broader picture is that overall, we have way, way less crypto margined futures contracts compared to what we did, you know, earlier this year. I suspect as you, you know, as as we move past all time highs, you'll start to see this increase because people are more bullish on Bitcoin and other crypto assets that they're going to be margining these futures contracts with. But, you know, we're in a good spot right now because it's showing you there's there's less convexity to the downside, right? So if we have like a, you know, a large liquidation cascade like we did, you know, you know, on on May 13th.

• 16:19Speaker 02

  What happened was is we had such a large amount of coin margin contracts that, you know, as and and I mentioned this like two weeks ago, I know Dylan mentioned it last week, but I I really think it's important for for people to understand in terms of like the how this affects market structure. That, you know, in in May, all these people were marked, you know, they were collateralized with crypto. So as their P and L is decreasing. Their their, you know, margin was decreasing as well. And so it, you know, creates people. People are more susceptible to being squeezed, you know, to the downside. So longs are more susceptible to be getting squeezed. And when you have low percentage of of contracts that are margined with crypto, AKA a larger percentage that are margined with stablecoins or USD.

• 17:00Speaker 02

  That means that these these, you know, traders on the short side are more susceptible to getting squeezed to the upside or or short squeezes are more likely because. When you collateralize with Bitcoin, you basically have this inadvertent hedge, right? So you're, you know, let's say you're short, Bitcoin price starts going up. Well, your P and L is going down because the trade's going against, you know, your betting price is going down and it's going up, but also your collateral is actually increasing because Bitcoin's price is increasing. So you kind of had this little hedge, right? But if you're collateralized with stable coins, then you don't have that. And so it's just more favorable market conditions for the bulls.

• 17:38Anthony Pompliano?

  When we look at Sopra, this is, I feel like you and I have been talking about Sopra for so long that this one's never going away. But we had, over the summer, we were under one, which is not good. Then we went back over one, we bounced off of it a few weeks ago. We're trending downward. How do you think about, does that mean it goes down to one? Is there something else that happens?

• 17:59Speaker 02

  Sure. Like, if you look at the chart at the end of last year, we kind of just set these higher lows as we moved, you know, further into the bull run. So I don't necessarily think that we have to come back down and retest one. But if we do have a correction, like a major correction, you want to see us bounce off one. And so, you know, just monitor this if you have a Glassnote account and I'll throw it in the newsletter next week or tweet about it if there's anything to be concerned about. But, you know, ideally you would like to kind of see higher lows, right? As we kind of move, move higher. But, you know, if, like, the point I'm just trying to get across is if we do have a correction, you want to see us once again bounce off one as we did last month. Well, last month

• 18:42Speaker 02

  to me was confirmation that we were in bullish market structure. Because you're also looking at, in this chart, you're looking at the seven day moving average, basically weekly sopor. And so this is like the broader trend. The daily, like, you can look at the daily version, I just think it gets a little noisy in terms of like trying to identify like, okay, maybe not what's going on day to day. You can look at the non, you know, moving, without the seven day moving average. But when you're trying to understand like, you know, what's, what's like this broader market structure, I think you can, you can apply to like seven or 14 day moving average.

• 19:12Anthony Pompliano?

  When we look at the whales.

• 19:16Anthony Pompliano?

  I'm fascinated by this. We have three lines, basically, on this next chart. One of them is blue, one of them is green, and one looks like it's almost like black or gray. And the blue lines are the smaller holders of Bitcoin. And it looks like they just, they accumulate no matter what, basically, right? They're just up into the right, they're gonna continue to kind of almost dollar-cost average, it looks like. But the green line looks a little bit more wavy, if you will, and that is the whales that have more than 1,000 Bitcoin in their wallet. They were accumulating aggressively in September, then they started to sell off at the start of October, really, and then it looks like they're accumulating again. Are they just trading?

• 19:59Anthony Pompliano?

  Like, how do you think about that activity of they're not just long-only? There is some selling that's going on periodically.

• 20:08Speaker 02

  Yeah, so, first of all, like, this is relying on Glassnode's entity heuristics, so it's not perfect, right? And so, like, a month or so back, you know, I would look at the exact numbers, but since then I've kind of changed my thinking, just because, you know, like, their heuristics aren't perfect, so you can't rely on, like, okay, whales have accumulated exactly this amount of coins. And so, I also have now started to throw a 14-day moving average on this to kind of smooth it out a bit. And so, I think it's still useful in the sense that we can look at what's the trend, right? But in terms of getting, like, the actual, like, granular number, like, raw number, I don't think it's fully accurate to look at in that sense. But yeah, like, generally what you see is with the smaller guys, right?

• 20:52Speaker 02

  We're talking about, and the blue line is the .1 to 1 BTC guys. Like you said, they accumulate non-stop, right? You look at this on, like, a broader chart since Bitcoin's inception, it's just literally, like you mentioned, you know, up into the right. And so, you know, if you're gonna, like, you know, present, you're gonna do, like, some kind of presentation on, you know, Bitcoin as an asset to some, you know, investor, like, I would throw that in there, right? Because you're basically saying, like, you have this hardcore, you know, group of people that dollar-costs average, you know, dollar-cost averages into Bitcoin, no matter what, right? They're buying, prices up, down, whatever. They're just, you know, they're just taking passive out of their income every, you know, day or every week or whatever, putting it into Bitcoin.

• 21:32Speaker 02

  With the whales, though, what you see with with the screen lines, they generally kind of impact the movement of the market, right? Because by definition, they're the larger buyers. They generally sell into strength and buy into weakness when we look at this in a very broad sense. And so it's not surprising to to see them have, you know, they initiated a lot of that selling on the way down, moving into the summer. They bought, you know, some of the weakness over summer, kind of move, you know, initiated that rally into into July. And they, you know, they took some profits as as we, you know, started to move down a little bit, partially because they're probably, you know, moving the market down a bit because they're large buyers by definition.

• 22:12Speaker 02

  But you've started to see them over the last two weeks accumulating again into the into this weakness that we've had since that failed all time high breakout. And so, yeah, I mean, generally, though, I don't I don't look at this on like a on like a day to day basis. Like, I don't necessarily like say, okay, whales are selling like the market's going to go down. But it it is interesting to see like, you know, people are panicking about like a shakeout, for example, like we had yesterday. Meanwhile, whales have been buying over the last two weeks into weakness. So I think to an extent, you could just you could just look at this to kind of reassure yourself like, okay, yeah, like the smart money isn't freaking out like you shouldn't freak out either.

• 22:50Anthony Pompliano?

  When we look at the supply shock ratios, I think this is where it starts getting real fun. This was part of an epic thread. How long did it take you to put together like the 2223 tweet thread?

• 23:00Speaker 02

  Uh, I don't know, man, like, like two or three hours. I was just like two or three, you know, cups of coffee deep by the end.

• 23:08Anthony Pompliano?

  It was a fantastic thread. But when we look at these supply shock ratios, what is this telling you?

• 23:12Speaker 02

  Sure. So, oh, by the way, you might think this is cool. It's it's in Glassnode now, so I got my like first metric like officially in Glassnode. It's just like really, really cool for for anybody else who likes to like geek out about this stuff. But, um, but anyway, yeah, so this is comparing the the highly liquid and liquid guys. It's the illiquid guys. So essentially, the the, you know, weak to strong hands. Oh, I'm sorry. This is the this is the long term holder supply share. I thought you were pulling up the other chart. We can we can talk about this one.

• 23:42Anthony Pompliano?

  No, the, the, let's do the long-term holder or supply shock.

• 23:44Speaker 02

  Okay, yeah, sure. Okay, so this one, this is looking at the short-term holder versus long-term holder supply. And so what I, I've, I've actually usually shown this inverse. So people who, people who are confused like, oh, I've seen this chart before, Will, why does it look weird? That's why it's, it's, it's the opposite of what it usually looks like. And so the reasoning is because I kind of saw this pattern, I was staring at it and I was like, hold on, like, if you draw trend lines, right, we're basically in this kind of descending wedge, which by the way is like a bullish pattern and technical analysis. But the, the point I'm just trying to get across here is that when we hit the bottom of this trend line, it's usually when we're at the bottom of these macro corrections. So if you look at, you know, between the, the 2013, 2017 bull run

• 24:28Speaker 02

  at, you know, at the bottom of the bear market, we, we had two taps along the bottom of the line, at, you know, at the very bottom of the, the 2018 bear market, and then also during March, we tapped the bottom of the line. And then above the, the upper trend line, that's been actually a good signal of when we've hit these macro peaks. So if you look at 2013, 2017, and so now, you know, after we just tagged the bottom of that, you're, so it's kind of counterintuitive. When you hit the bottom of the line, that's actually when the market, you know, you're, you're saying that the market is, is the, the most bullish, because you have, you have long-term holders that are, although this is at the bottom of the bear market, it's saying the long-term holders have locked up the largest amount of supply. So like the, the expected price appreciation is at the highest when it hits the bottom of this trend line,

• 25:13Speaker 02

  essentially. And so we've hit the bottom of the trend line. So in other words, what that means is that long-term holder supply shock ratio is at an all-time high, because the chart's inverse. And you're actually now starting to see long-term holder supply roll over a little bit, which we've talked about this many times, it's, that's natural bull market behavior, right? You see long-term holders accumulate into, into weakness in the bear market, they kind of set the floor, lock up a certain portion of supply, that kind of initiates the momentum into the next rally. And then as, you know, the reflexivity of a full-blown Bitcoin bull market takes off, you know, it kind of becomes a self- feeding thing, and then the long-term holders can then start to, you know, Sell their bags to the newer market participants. You're now starting to see the long-term holder supply roll over a little bit.

• 25:58Speaker 02

  You started to see that like right after we had that all-time high breakout. Since then, they like it's it's kind of flat, but you it it looks like it looks like it's kind of topping out, which is once again, natural, natural, you know, bull market behavior from these long-term holders. And I suspect you'll start to see long-term holder supply decrease, you know, more so, which means that we'll move, as I put in that arrow in that in that chart, we'll move back towards the upper bound of of the descending wedge. So it's counterintuitive. What I'm saying is, as we move higher back towards the upper trend line, it means that long-term holders are are selling their bags to short-term holders, which is natural bull market behavior.

• 26:36Anthony Pompliano?

  That makes complete sense. And and I think it's, what you're really highlighting here is multiple data points are telling us this exact same thing, right? Which is we're in a bull market. There's some short-term kind of day-to-day stuff that is natural. But that larger macro trend is definitely still in favor of of those that are holding Bitcoin. The last chart that we have here is this entity-adjusted rolling 90-day sum of coins destroyed. Jesus Christ, this is a long, yeah, a long one. First, let's start with like coin days destroyed. I don't think people understand that concept and then tell us exactly what this is showing us.

• 27:11Speaker 02

  Sure. So for anybody who's very visual, and I know sometimes I like start rambling all over the place. You can, I put on, I put a thread out on my Twitter, like it's actually in that huge thread. So you can find it in there if you want to scroll back a few weeks ago. But essentially, like what destruction, this is a, you know, it's kind of like a core concept of on-chain analysis and something that like anybody who's trying to get into the space needs to understand. The, you know, the the way I would explain it is, if you move a coin to a wallet, right? It's let's say we move one coin to a wallet for one day. It sits in the, it sits in that wallet for one day. It's now accumulated one coin day. If I then move the coin out of that wallet after one day, then it's now destroyed one day. Or if I move the wallet, you know, if I move the coin into the wallet for 10 days,

• 27:56Speaker 02

  it's accumulated 10 coin days. If I then move it out of that wallet, then it's now destroyed. Ten days. And so that that's kind of the basis of destruction. You can run different ratios. There's other metrics based off of destruction. But what this is looking at is then so the the ninety day thing is just the rolling ninety day sum. So usually we look at like moving averages, right, which is the mean. So you look at, you know, or all, you know, over the last ninety days, what's the average? And what this is doing is this is adding up the previous ninety days. So that's where the rolling sum comes from. And then your entity adjusting it using Glassnode's, you know, entity heuristics. And what you see is that we were and then on top of this, I threw, I know this is like,

• 28:40Speaker 02

  this is like a lot to to like throw at you, but then this is I threw a ninety day moving average on top of the ninety day sum of coin days destroyed. And so the point is, like the TLDR, is that destruction is at a is is very low in a broader sense, you know, compared to to where we've been historically, especially given, you know, price action. Usually you see destruction at, you know, at these lows in the bottom of the bear market. And the reasoning is because, as we talked about, that's when long term holders are accumulating the most. So that's when you're actually seeing coin days being created the most. Usually you see coin days destroyed at the top of a bull market.

• 29:22Speaker 02

  And so this is just another metric showing that you have really strong hodling behavior. And so this backs up all the things we've talked about, long term holder supply, illiquid supply, hodl waves, average spent output lifespan, spent volume, age bands, all these different metrics that are basically showing you the same thing that, you know, you have really strong hodling behavior. This is just another way to show that, as you're showing that there's very low amount of coin days being destroyed or very low destruction, meaning that there's there's, you know, not many old coins being spent.

• 29:56Anthony Pompliano?

  When you kind of zoom out here, right, there's all this data and I think that you and I love looking at this. My brother's like looking at it. There's plenty of other people on the internet like looking at it.

• 30:04Speaker 02

  Hey, I've seen you, by the way, on Twitter. I like your tweets, man, because it's cool. You're like, you're like pushing on chain and that's awesome. I see you like pumping out stuff about like realized cap. I'm like, okay, Paul.

• 30:14Anthony Pompliano?

  Well, here's what I think ends up happening, right, is as people learn more and more about the on-chain metrics, they start to realize that it's there for everyone to see and it tells you so much about what's going on in the network. And if you don't look, it's kind of like if a publicly traded company was to have a daily kind of earnings report, right, to some degree, you could see all this data, but you just say, I don't care about it. And so when you start to look at it, you start to, one, understand the importance of the on-chain data. Two, is you start to understand where you are in these like macro cycles, which I think is important. But also, three, is it drastically kind of grounds you from a psychological standpoint.

• 30:56Anthony Pompliano?

  Because when you're just looking and you see, oh, Bitcoin's up, you know, right now, if you didn't come on and explain, hey, the reason why Bitcoin's up right now is because there's big buyers on Coinbase, like all of a sudden, you're like, okay, there's an action happening and now I have an explanation, right? And so I think as people become more and more familiar with it, I have a crazy thought for you. This is the first time I've ever saying this publicly. I'm gonna say it to you because I feel like it's fitting, which is historically, understanding accounting was the language of business. I think that on-chain metrics will be the language of money moving forward. And so it's, you know, whoever understands on-chain metrics, you are going to be the person who really understands money and understands the flow of capital and understands what's happening in the financial markets. If you simply just understand traditional

• 31:41Anthony Pompliano?

  accounting, but you don't understand on-chain metrics, you're almost going to be flying blind in a lot of these capital flows. And so I think that the work that people are doing in on-chain metrics is incredibly important, because, one, it's not just a, hey, let me learn on-chain metrics, but also, two, as you know, you've done with some of the supply shock stuff, many others like Willie Wu or David Puel and Dylan and, you know, all these people, they're coming up with new metrics. And for years to come, people will use those metrics that are being created today as the standard way to measure various things. And I think that's ultimately what's kind of so cool about what's happening right now is just the data is there. It's how do you look at it? What perspective? How do you analyze it? And the community continues to kind of churn out better and better data analysis, which then informs millions of people around

• 32:26Speaker 02

  No, yeah, I think I think that's that's really insightful. I you know, I've never thought of it in the sense of like, you know, you talked about, you know, accounting is the the language of business on chains, the, you know, the the language of of money. I think that's that's really insightful. Yeah, I mean, like on chain, you know, we essentially just have like X-ray vision of of what's going on with all these market participants. And and the data is the truth. And like, as you said, you know, you have you have the data and then you have the analysis around the data, right? And so, you know, like when I when I first started studying this, like my analysis of the data, just because I was new to like, it wasn't great, right? Because I like, first of all, I didn't have a great understanding of it. But, you know, separating separating the analysis from the actual data, the data is indisputable, right? Like, we're pulling it from a blockchain.

• 33:11Speaker 02

  You know, it's even even people like to talk like, okay, what if you're manipulating the data? Well, if you're manipulating the data, it's just showing what's going on in the data, like, like, even if you're I'm still analyzing what's happening, right? And and I completely agree with you. I think of it as we're essentially the economists of Bitcoin, right? And and the problem is like, I I've said this before, and then like all the Bitcoin, the hardcore Bitcoin people were like, yeah, well, that's a terrible like, you know, you don't want to be an economist. Well, it's like, I mean, I I the way I see it is like, well, economists haven't had, you know, indisputable data from a from a public ledger before, right? We have so much granularity, basically are tracking all the transactions that are going on on any given day.

• 33:57Speaker 02

  You know, and and and that's like privacy aside, right? Like, there's like what chain analysis does in the sense that like they're looking at who it is. I could care less who it is, right? I just want to understand what's the market structure. I could care less about who the individuals are doing things. And yeah, I mean, that that that's exactly how I see it, that we're basically like the economists of Bitcoin. And as we move forward, this will be more and more important. We'll have new metrics come in. When you look at the stuff that we even had earlier this year, you know, I think a lot of, you know, kind of kind of the, you know, the silver lining from like on-chain analysis perspective of of the bear market, the mini bear market over the summer, that's what I've been calling. lately is that you know you had all these new metrics this whole family of these supply

• 34:41Speaker 02

  related metrics specifically that we now have that you know they're now these are at like the forefront of my analysis we didn't even have them before me and so I can't even imagine you know in the next year where we're gonna be it's it's really cool to see you know people like you you know there's all kinds of new analysts that I see popping up on twitter that are pushing out new metrics and it's so it's a very tight-knit community in the sense that like you know someone else will put out a metrics a metric I'll build something on top of it or Dylan will build something on top of it right and and it's like this self-feeding you know we're we're open sourcing the information but you know that's the reason why I really want to push the explanation of this stuff so hard is that if if I explain it it might you know hit off a light bulb with

• 35:25Speaker 02

  somebody else and they might run with some metric that I created right and then they might take a step further and it just you know we can all win together in this little niche thing for now I think you know at least for now because it's it's so small in terms of you know where where I envision this going I think like on-chain analysis and you know you know turn around like 10 20 years it's gonna be huge right I think there's a good chance by the end of the bull run you'll probably see on-chain metrics on like you know mainstream media like CNBC and stuff

• 35:54Anthony Pompliano?

  this is the mainstream media will you are on the mainstream

• 35:58Speaker 02

  there you go

• 35:58Anthony Pompliano?

  nobody watches that stuff anymore John Joe what questions you guys got you go first Johnny

• 36:02Speaker 03

  um yeah well what's up congrats you're fired up by the way I love it um so can you talk about like when do you see this I guess bull market kind of slowing down um with the circle pass and then when that happens what are you looking at what metrics are key there

• 36:19Speaker 02

  sure so I would say to check out the thread that I put out um two days ago it's like my pinned tweet I put out 22 different metrics in specific that you can look at to gauge where we are in the bull market um all of those would be my answer uh and I'm I like you know I we could run through them all but I'm probably gonna have people asleep by the end of it but I would look at for some of those behaviors in the thread um and also this kind of like a way I can like cop out of the answer but I would scroll through and check out um some of those things in terms of the behavioral trends and then also like specific kind of like price targets um

• 36:57Speaker 02

  Yeah, I mean, I, I think it's, it's hard to say though, when, when the bull market ends. Um, cause a lot of my buddies will come to me and say, um, you know, when, when is the bull market gonna end? That's what everybody wants to know. Is it gonna be December or January? I mean, I don't really see it that way, right? I, I look at it more of like, what are the behaviors that we look to identify? When the market is historically like getting overheated or when is it a good time to buy? Um, you know, when, when do those behaviors start to look a little toppy, right? And so like, as far as like, timing wise, it's hard to predict, you know, what that would be. Historically Bitcoins topped out in December, right? But, um, that, that doesn't necessarily go to say that, you know, we definitely will top out in December.

• 37:39Speaker 02

  So I don't really have a base case for the timing specifically. I just know like what behaviors I'm gonna look for, if that makes sense.

• 37:47Speaker 03

  Yeah, it does. I'll check out your thread too.

• 37:49Speaker 02

  Thanks, bro.

• 37:50Speaker 03

  Joe, what do you got?

• 37:51Anthony Pompliano?

  Uh, Will, so thanks for all this. The, the on chain metrics are fascinating. I think, uh, not only us, but the, the people watching really appreciate them, appreciate them every week. So, uh, appreciate that. But my question would be like, when we zoom out, right? Uh, we've talked about this before. We all, and you specifically have mentioned that we're gonna be in, we're in a bull run right now, right? And, and you're anticipating that we'll hit, uh, a hundred thousand in price, whether it's at the end of this year or shortly thereafter, et cetera. Are you still, uh, sticking to that? Are you, uh, feeling different about it? How do the metrics kind of tell the whole story when you look at all of them combined?

• 38:22Speaker 02

  Yeah, no, I think like, if you look at all those metrics in the thread that I put out, um, you know, the, the kind of consensus is, is that we're kind of lukewarm, right? In terms of, you know, how like overheated, if you will, we are. We're, you know, we're not at, you know, the bottom of like a bear market in the sense that like we have like insane amounts of room to run, but I think, you know, I think we still have a fair amount of, of, of, you know, room to go. I, I, I don't really have anything else to say.

• 38:48Anthony Pompliano?

  I, I would, I would ask too, like, maybe this is way out of left field and it doesn't have any correlation, but is there any, uh, kind of thing that you can draw from? We've seen a bunch of, uh, of shitcoins frankly, start to get a lot of volume and start to get a little market exposure. Does that have any impact on the Bitcoin market or none at all?

• 39:03Speaker 02

  The way I see it is like Bitcoin is Bitcoin is the, you know, the kind of the king in the space. And so when Bitcoin moves really aggressively, which I think we haven't really seen a, a, a real, you know, move in Bitcoin in, in that sense, since like the end of last year. You'll start to see the liquidity flow out of some of these alts, right? And, and then, you know, I, I look at the altcoins from a trading perspective as kind of a derivative of Bitcoin. And basically like there's a risk curve, right? And, you know, in a, in a bull run, you can go out further on the risk curve. And so this is like something like Ralph Paul's talked about. And then like, I know all the Bitcoiners give him so much shit about like owning all coins, but he's a trader, right?

• 39:45Speaker 02

  And so what, what he's, what he's saying in terms of like, I remember he came on, on your guy's show and he was like, I'm really heavyweight ETH. The reasoning is because he knows that we're in the, the second half of a, a bull run. And the further you, you know, the further towards the peak of the bull run you go, the further out on the risk curve you can go in terms of, you know, the assets that you hold. And so, yeah, I mean, I suspect that a lot of these altcoins are probably going to run, right? And, and you'll see these, these really large moves in, in some of these names like Solana, Duriom, et cetera. You know, I don't own those things. I own Bitcoin. But, you know, that's not to say that you won't see, you know, USD appreciation in those things. And they're, they're way more reflexive than Bitcoin, which just means like in the bull run,

• 40:29Speaker 02

  they're going to, they're probably going to outperform Bitcoin, right? And, and then, but in the bear market, they're going to dramatically underperform Bitcoin. And so, I mean, I think you just, if, if you're going to mess around with that stuff, like you need to understand, you know, risk and, and understand like how these things behave with each other. Because at the end of the day, it, these things are really just kind of orbiting around Bitcoin. You know, if, if Bitcoin, if Bitcoin absolutely nukes, well, the market's going to nuke. I mean, maybe you have like one or two coins that are like decorrelated from the rest of the market. But generally speaking, you know, Bitcoin has a large move. You know, the, the way to think about it is like altcoins, being long altcoins are basically, it, it's basically being short Bitcoin volatility, right?

• 41:11Speaker 02

  And then so if, if Bitcoin's volatile in either way, then you probably don't want to be long altcoins, at least in the short term.

• 41:18Anthony Pompliano?

  Well, when you think about all of these on-chain metrics, when you wake up in the morning, what do you check first? Like, what's the very first thing that you're like, that's what I run to that because that tells me, you know, as much as I need as the first thing?

• 41:32Speaker 02

  Sure, it's, it's obviously price, right? And then, second of all, it's, it's the derivatives data. Because I check, like, the on-chain data, at least on Glassnode, updates at 8:30 PM. So, like, I mean, I'm at my computer at, like, 8:25, like, give me the data, right? And then as soon as it loads, I'd like, I get my fix, right? I figure out everything that happened for the day, and then that's it, right? Like, the data really doesn't fluctuate that much from an on-chain perspective, like, day to day. But, yeah, like, the derivatives data changes all the time, right? Like, funding, open interest, you know, looking at, like, the CVD to gauge, like, spot, like, some of these different things, you know, the order books, I watch those throughout the day. I would say some of those things, like, definitely the first two things that I check in the morning

• 42:15Speaker 02

  are what's, you know, price, you know, were there liquidations, if there's, if there's a large move, and then also, like, you know, what is, what is, what is funding? And, you know, also, like, on open interest, I look at, you know, the, like, we mentioned the coin versus stablecoin thing, like, a bit of granularity, but in general, the derivatives data, because that, like, we mentioned, that stuff really drives, you know, the short-term price.

• 42:39Anthony Pompliano?

  Yeah, it's fascinating to me. That's what you run to first. It says so much about, like, the importance of that data set. So, I appreciate it. Awesome, man. All right. Thank you so much for, for taking the time to do this. Well, we'll see you on Friday.

• 42:49Speaker 02

  All right. You guys have a good weekend.

• 42:50Anthony Pompliano?

  Take care.

• 42:51Speaker 02

  Thanks, Will.