#929 Will Clemente On Bitcoin Investors Refusing To Sell Their Bitcoin

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. WIll joins us every Friday on "The Best Business Show." To see the video with the corresponding charts that Will references throughout the interview, go to the Anthony Pompliano YouTube Channel. ======================= 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 http://coinbase.com/wallet to learn more. ======================= If you’re a regular listener of the podcast, I would bet that two things are true: First: You’re passionate about Web3 and protecting your personal data And two: that you’re a human. If I’m right, then congratulations! You’re entitled to all the benefits of the decentralized web. But there’s a catch: As Web3-enabled tech — like NFTs, smart contracts, and DAOs — drive more elements of our “real world” lives online, proving that you’re a person – without surrendering personal data – becomes exponentially more valuable. And exponentially more difficult. This is why Unstoppable Domains launched Humanity Check. Humanity Check proves that you’re, well, you – without revealing personal data. No matter where you go on the web, you’ll have total control over which apps you want to share data with…and which ones you don’t. Prefer to be completely clouded in mystique? No worries - Humanity Check is 100% opt in. If you want to feel alive, or at least prove you are, head to http://UnstoppableDomains.com and get your NFT domain with Humanity Check. ======================= The Pod Pro Cover by Eight Sleep is the most advanced solution on the market for thermoregulation. It pairs dynamic cooling and heating with biometric tracking. Go to https://www.eightsleep.com/Pomp to check out the Pod Pro Cover and save $150 at checkout. Eight Sleep currently ships within the USA, Canada, and the UK. =======================

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. In this conversation, we talk about Bitcoin, the market structure, on-chain analytics, and where we go from here. I really enjoyed this weekly conversation with Will, as always, and I hope you do as well. Before we get into this episode, I want to quickly talk about our sponsors. 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. Collect more NFTs, earn more with DeFi, and trade more than 4,000 tokens. Whether you're looking

• 0:46Anthony Pompliano?

  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, that's coinbase.com/wallet and learn more today. Today's episode is brought to you by Unstoppable Domains. If you're a regular listener of this podcast, I bet that the two things are true. First, you're passionate about Web 3 and protecting your personal data, and two, you're a human being. If I'm right, then congratulations, you're entitled to all the benefits of the decentralized

• 1:28Anthony Pompliano?

  web. But here's the catch. As Web 3-enabled technology like NFTs, smart contracts, and DAOs dive more elements of our real-world lives online, proving that you're a person, without surrendering your personal data becomes exponentially more valuable and exponentially more difficult at the same time. This is why Unstoppable Domains launched Humanity Check. Humanity Check proves that you're, well, you, without revealing any of your personal data. No matter where you go on the web, you'll have total control over which apps you want to share your data with and which ones you don't. Prefer to be completely clouded and mystique? No worries, Humanity Check is 100% opt-in. If you want to feel alive, or at least prove you are, head to unstoppabledomains.com

• 2:10Anthony Pompliano?

  com today and get your NFT domain with humanity check again head on over to unstoppable domains.com and get your NFT domain with humanity check today this episode is brought to you by eight sleep eight sleep is the single best product that I have purchased over the last three years it completely changed my life I'm not joking pay attention the pod pro cover which goes over your mattress by eight sleep is the most advanced solution on the market for thermal regulation it pairs dynamic cooling and heating with biometric tracking you can go to eight sleep.com slash pump to check out the pod pro cover and you save 150 at checkout they currently ship within the United States Canada and the UK and I told you it changed my life it helps me

• 2:51Anthony Pompliano?

  sleep deeper helps me sleep longer I feel much more refreshed and I have better energy you want to know how I have relentless energy every single day because I sleep on an eight sleep seriously go check it out eight sleep.com slash pump today all right let's get in this episode I hope you guys enjoy this one Anthony Pompliano runs pump investments all views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of pump investment you should not treat any opinion expressed by pump 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

• 3:31Anthony Pompliano?

  we have the wizard will Clemente joining us uh will how are you hey guys I'm good I just got my coffee in the system so I got the blockware uh shirt on here ready to go yeah look at that man yeah those are fresh shirts all right um all right we got a whole bunch of stuff we got to get to before we start though let's start just with like how are you feeling sentiment wise on Twitter like it seems like people are cautiously optimistic how would you put it um I mean I think the majority of people are just you know cautious to bearish um I think that it's also kind of like reflected and derives as well I don't think I mean it's kind of sounds like a cop

• 4:15Anthony Pompliano?

  out answer but I don't think anyone is overly bullish if anything people are kind of swaying bearish uh but you know across the board just seems like everyone's at a minimum cautious all right I mean that's not that's not fun but that's just where we are right like it just kind of feels like man that there's no uh there's no catalyst yet to really ignite all the uh the

• 4:37Speaker 01

  Yeah, we'll talk about that in a minute.

• 4:39Anthony Pompliano?

  All right. The first thing I think we want to talk about is this idea of like Bitcoin in no man's land. I think you've been kind of talking about this for a little bit. And we've got the short term holder cost basis as a kind of an initial metric to look at. But how do you think about this idea of no man's land? And how that relates to these short term holders?

• 5:03Speaker 01

  Yeah, so in the newsletter, we've been talking about this kind of value momentum mental framework for approaching the market for a while now. To be transparent, this is a mental framework I stole from my buddy, Avi Feldman, who's a hedge fund manager.

• 5:21Speaker 01

  But you know, I think in general, you have like momentum based market participants and value based market participants. And so when we're talking about momentum, here at Blockberry, we kind of see that as several closes above 47,000 at the current moment. And then we see value as the low 30 Ks, kind of the 30 to 35 K area. For the for the value, you know, framework, that's pretty straightforward, just looking at price structure. For the momentum framework, we have two charts kind of highlighting that. In addition to just the fact that this is a key area from just like price interaction, as well as it's right around the yearly open. The first chart, though, we have up is the short term holder cost basis. So we've talked about this, I feel like a million times here in the show.

• 6:05Speaker 01

  Essentially, this is just the aggregated cost basis of all the entities that have been in the market for less than 155 days or less than three months. And so this is telling you, you know, where that that average cost basis is for those market participants. And that has a lot of kind of behavioral effects when price approaches that area. So in bull markets, whenever we retest that, those new market participants don't want to sell at a loss when Bitcoin is in a several month aggressive uptrend. When we head into the bear, though, every time we get an underside retest of that cost basis, people look to exit and break even. And so as you could see recently, that push up to 47 K, we couldn't hold that on several consecutive closes. And so that does appear like it was a failed underside retest.

• 6:50Speaker 01

  And you see confluence in the second chart, which is the exponential whole moving average. For this, I'm looking at the 180 period weekly version of this. Essentially, this is like a moving average that has a bit more way like weighing to recent price action. So kind of like a smoothing factor. The reg is just telling you that the moving average is declining. So this is actually a good kind of like high timeframe indicator to look at. As you can see in 2018, this turned red, you know, several weeks before that final capitulation. Again, you know, this, this does look like we just experienced this failed kind of underside retest, similar to kind of like mid 2018. But again, I, I think, you know, there's, there's confluence across several things that

• 7:35Speaker 01

  closing above that 47 K area, we can start talking about momentum coming back into the market. But as long as we're below, I don't think it's, you know, it's wise from like a high timeframe perspective to step in as like a value based market participant. So above 47 K for that momentum threshold, low 30s for that value threshold. And that's where kind of the me saying we're a no man's land came from because we're kind of in between those two.

• 7:59Anthony Pompliano?

  Makes, uh, makes complete sense. And then if we look at this one day correlation between Bitcoin to the NASDAQ, uh, I haven't seen very many people looking at the one day correlations. What's going on here? This looks pretty crazy.

• 8:12Speaker 01

  Yeah, it's really unprecedented. So this is just looking at the, as you said, one day correlation of Bitcoin to the NASDAQ. As you can see, we're in, you know, uh, really extremely high territory of, of correlation. We had set like a new record at the beginning of 2022 for the highest correlation ever, or kind of highest block of sustained correlation ever. We broke that over the last week or two. So as you can see in the, on the bottom right hand of the right, right hand side of the chart, uh, this big block of blue, uh, essentially that's just telling you that the correlation is high. And so you can see that kind of orange line I drew, that was the prior all time high. We pushed above that over the last week.

• 8:55Speaker 01

  It's currently sitting at 0.98, uh, which is very high. I mean, Bitcoin's essentially just kind of trading tick for tick with the NASDAQ. And so, you know, I think. We'll talk about this in a second. This has kind of been one of the driving forces, obviously, around Bitcoin price action. And so you've seen that kind of rebound in tech towards the end of last month, and you've kind of seen that roll over this month over the last few weeks. And that's obviously translated into BTC as well. And whether Bitcoiners view Bitcoin this way or not, and we'll talk about in a second, some of the metrics that are illustrating that Bitcoiners beneath the surface are stacking BTC and

• 9:37Speaker 01

  kind of convicted as ever, you know, kind of the marginal buyer seller is viewing BTC as kind of this high beta asset, basketing it in with tech.

• 9:49Anthony Pompliano?

  Got it. And so when you think about this correlation, talk to me a little bit about the, there's decoupling, right? So like correlation goes down. There's also this idea that like tech stocks could just explode, people go kind of risk on again. It sounds like you think the decoupling is more likely to be what happens than like there's a recovery in risk assets. Is that fair?

• 10:12Speaker 01

  Yeah. So I think for BTC to move up, just from first principles, you need either one of two things. And it boils down to either A, you need tech stocks to rebound, and that would drag BTC up if we have the sustained period of high correlation. The other way BTC could move up would be if that correlation broke down. And so with that in mind, I think for the latter, I mean, for the former, talking about tech stocks rebounding, I think Darius actually did a really good job. And I'm not going to get into that because I think he really nailed it on the head. He's more the expert in that realm. Let's talk about like what it would take for tech stocks to rebound. One of the biggest things, obviously, just

• 10:53Speaker 01

  being like the Fed being extremely hawkish. But for the decoupling piece, I think that's where I could maybe provide listeners a bit more value with some kind of Bitcoin centric data points. And so like for this decoupling to theoretically occur, you know, I think first, first just highlighting the fact that markets move in kind of these pendulum swings. What I mean by that is like they go from Extreme to extreme and this happens not only with price action but also like narratives and trends in the market. And the trend obviously we're talking about here is is the correlation to NASDAQ. So I mean, when you go back and look at the chart, whenever the correlation gets extremely high, you could even see this at the beginning of this year.

• 11:35Speaker 01

  It went from getting to an all time high and then came all the way back down to negative. And so you get this kind of pendulum swing that goes back and forth and when everyone, when everyone on Twitter is talking about, you know, this correlation and it becomes consensus, that tends to be when that that pendulum is beginning to start to swing the other direction. So I think that's one thing just to keep like preset in your mind, the fact that we've had this prolonged, sustained regime of of strong correlations to NASDAQ. So but for that, for that decoupling to occur, you need either like two things, either in the short term, some type of idiosyncratic flow, meaning, you know, some like large buyer stepping in, the Luna Foundation guard, Doquan stepping in and buying the, you know, several billion dollars of BTC has been one example of that.

• 12:20Speaker 01

  You know, Sailor was another example. So I think, you know, if you had some large entity that stepped in, that could drive idiosyncratic flow in the short term and cause BTC to to decouple in the short term. I think from the, from a broader sense and and this I have a bit more high conviction on because, you know, it's hard to say is a large buyer going to step in or not. In a broader sense, I think what the data is showing you is that beneath the surface, you have a lot of these crypto native, high net worth individual, kind of forward looking institutions that are viewing BTC as a store of value. And, you know, despite all of the uncertainty we've got geopolitically and just in markets in general,

• 13:04Speaker 01

  you're seeing several metrics, which we'll, we'll look at the charts in a moment, illustrating the fact that these holders are just holding, right? And so you kind of have this dichotomy of a lot of these traditional finance entities that are viewing BTC as, you know, a high beta tech tech asset. And then these convicted crypto natives or just people that understand the value proposition of Bitcoin. Bitcoin and they're holding, you know, during this time of uncertainty. This is the time that, you know, Bitcoin was built for, right? We have inflation extremely high geopolitical uncertainty. And so I think what's kind of going on beneath the surface is my buddy Suzu eloquently kind of phrased this to me as like a supply gentrification. And I think you kind of have this

• 13:48Speaker 01

  transfer of of supply from that one basket of of entities I talked about to the other. And so I think kind of this sideways range that we've been in is an illustration of equilibrium between the transfer of the two of those entities. And so I guess with that, we could dive into a few of the charts that I have to kind of back up that thesis.

• 14:07Anthony Pompliano?

  So let's do this idea of how much supply hasn't moved in the last 12 months. And you're comparing the seven day moving average off of the NASDAQ high. We were just talking about a bunch of stocks just getting actually decimated in the stock market. So what's this showing us?

• 14:24Speaker 01

  Yep. So in green, you're looking at the seven day moving average of the NASDAQ, the percentage of of the NASDAQ off its highs. And so you can see right now we're about 18% roughly, or today it might be closer to 20%. Haven't looked at what the NASDAQ's doing in the last like 45 minutes because I've been reading the newsletter.

• 14:45Speaker 01

  But I know I know it's down today, so it might be down closer to 20%. Point is though, NASDAQ down fairly substantially. At the same time, you have an all time high in the amount of supply that hasn't moved in at least a year. And that's that orange line, or I should say, orange kind of area or shaded area. And so this is honestly pretty remarkable when you think about it, right? You have an all time high amount of supply that hasn't moved in at least a year, meaning people are sitting on their BTC convicted as ever, despite all the uncertainty we have that we just kind of described. Darius did a great job describing earlier today. And so to me, what this is showing is that there's this hodler base, right?

• 15:26Speaker 01

  This convicted hodler base that they're just, they view BTC as their store of value. I think, you know, a lot of kind of, there's, there's been several catalysts, even just this year. You know, for example, Russia getting their FX reserve frozen. Maybe it's just inflation running high. Or just over the last year, as Bitcoin ran up, people taking interest in understanding the value prop of Bitcoin. The fact that you've got this growing hodler base. And I, I think this is honestly pretty remarkable, the fact that you have people holding with conviction to this extent. Despite all the uncertainty and, and this is exactly what, you know, Bitcoin was built for.

• 16:04Anthony Pompliano?

  So when you see this, it seems like there's very much a battle, right? You talked about this a little bit earlier between the Bitcoin holders who treat this as the reserve asset, won't sell it. And then that whole idea of like the traders, the people who are worried about macro, look at this as a risk asset, et cetera. Is that really the supply gentrification that you're talking about? And that is what leads to that decoupling? And so it's like, we understand that the bases are different today, but we've got to get concentration into the holders. And as that occurs, which is already underway, but as that continues, that's really what'll provide the foundation for, for kind of explosive moves in the future?

• 16:42Speaker 01

  Yeah, I think so. That's kind of my thesis is that in the next 12 months, conservatively, we'll kind of see that transfer complete. And I think once that completes, then you'll start to see that, that decorrelation, once that supply transfer has completed. So yeah, I think you summed it up well there. We can look at two other charts, like briefly, just to like nail that point home. The second one is just looking at the exchange net position change. So this is the 30 day change in exchange balances. This has started to roll back over, over the last week or two, back into this like little blue grade. I don't even know what color that is, a zone that I highlighted there.

• 17:22Speaker 01

  That's showing you the, the rate of outflows is the fourth low, the fourth, you know, highest that it's, it's ever been. So you're seeing a strong amount of outflows from exchanges, coins coming out of exchanges. So that's another accumulation metric. And then the last one is looking at whale balances. I think this is the most interesting one, aside from the supply last moved in over a year. This is looking at all the entities with over 1,000 BTC and then we're filtering out all the known entities that Glasson has identified on chain. So OTC desks, exchanges obviously is a huge one for obvious reasons, grayscale, QBTC, the purpose ETF. And so what

• 18:05Speaker 01

  you get is essentially this kind of filtered whale balances metric and that's that green line. On top of that, I've overlaid these kind of color changes. And so it's just showing you when their balances are increasing, started to make, you know, higher lows versus decreasing. And so what you can see is that the their holdings have been increasing over the last month. And also when this little box I drew is just essentially highlighting this downtrend that their holdings have been in since September. And I think we're starting to see the early days of perhaps a breakout of that downtrend. I think it might be a little too early to like solid solidly call that a breakout of the downtrend. And so at least we push above those those the highs in their holdings from September at the end of last year. But nonetheless,

• 18:50Speaker 01

  we have seen accumulation over the last month or so from from whales, which is interesting and in confluence with some of those other things that we just mentioned. And so I think, you know, that's kind of like building the case. I mean, there's a few other metrics, but I've tried to keep it like relatively short, just for the the sake of the newsletter. But, you know, I think we're kind of building this case for this supply transfer over the next year or so. You know, I've talked to a few people that think that perhaps happens closer to like the end of Q2 into Q3. I think conservatively in the next 12 months.

• 19:27Anthony Pompliano?

  So when you see this all going on right now, I see Luna Foundation, obviously buying a bunch of Bitcoin, 100 plus million dollars a day. There's rumors slash maybe it's been confirmed to this point that Justin's son is going to go and he's going to replicate the same thing. Like, is that something from a catalyst standpoint that could just be a bunch of these stable coins all start backing their stable coins with Bitcoin? And there's enough buy pressure to really kind of change the dynamic in the market. The price has to go up to accommodate everyone?

• 19:56Speaker 01

  Yeah, I mean, I think if, um, you know, Tron started to back their, you know, reserve like reserves with Bitcoin, that would be more in the camp of talking about like those short-term idiosyncratic flows, then as well, it somewhat ties also into the basket and and so does everything that DoKwon's been doing of that supply transfer to crypto natives. Um, and, you know, by the way, I think like whenever this, whenever this transfer finally completes, um, and if a, if a decoupling theoretically did occur, I think it would have, um, I think first of all, it would be quite powerful, right? And the second thing is I think it would have a lot of reflexivity, meaning, you know, as you start to see that decoupling, people are looking at this and saying, wow, crypto, you know, crypto and

• 20:40Speaker 01

  Bitcoin more specifically is, is moving independently, um, you know, I need to take note of this. And almost that, their kind of FOMO of missing out on that, um, that, that change in, in trend of correlation kicks in and that drives the correlation even further. Um, so George Soros talks about this idea of, of reflexivity. I think it's extremely present in, in the Bitcoin market. Um, but I think it, it applies to narratives as well. And I think, you know, a, a decoupling, which is something that hasn't really occurred for the last two or three years since large institutional players really started getting involved in Bitcoin, I think that, that would have a high aspect of, of reflexivity to it.

• 21:21Anthony Pompliano?

  Yeah, it, um, it, it definitely feels like, uh, when you and I started doing these uh, conversations in the summer of 2021, that was, uh, very obvious that we were kind of going through this consolidation, uh, and at some point, people got kind of tired with the message, right, or bored of the message of like, oh, it's building, it's building, it's building. And it's like, yeah, like a big portion of it is just being patient. And then when it happens, it explodes, right? And when it explodes, everyone's kind of in hysteria and like, how did that happen? But these are the moments where you almost lay the groundwork for those explosive moves. And nobody knows, is it a week away? Is it a year away? Right? It, it's really, really hard to kind of understand that. Uh, but definitely a lot of these metrics, I think, are telling a story that is pretty compelling.

• 22:06Speaker 01

  Yeah, and I mean, I think it would be difficult to get some massive capitulation. Like, you know, a lot of people are talking about, well, we didn't have, you know, we haven't had like a bear market capitulation. I think a couple of things about that. So first of all, like, we didn't have a capitulation in my mind to the upside during this quote unquote "cycle" or whatever you want to call it over the last two years. The second thing is all these metrics that we've just described, you know, we're seeing heavy accumulation. I think that's almost acting as a force pushing up against the sell-side pressure, right? And the third thing is like the positioning in the derivatives market.

• 22:43Speaker 01

  So we've talked on previous shows about the percentage of futures contracts collateralized Bitcoin versus stable coins has come down about 50%. And so the convexity of those of those contracts, the setup of the current futures market right now has a lot less potential convexity if we did get some type of capitulatory spiral than it was set up in March 2020. I mean, the other thing, too, is people were jacked up heading into the halving at that time. The futures market now is relatively defensive in positioning. And then the other argument I would make to that is like the liquidation engines of the current exchanges that are dominating volume, especially like FTX is a lot less aggressive than Bitmex.

• 23:26Speaker 01

  So unless we had some, you know, massive capitulation in macro in traditional markets, which I think would, you know, just cause margin calls in BTC as well, because in that case, people have to sell what they have to, what they can sell, not what they want to sell. But aside from that, I think it's, it'd be difficult to see some huge capitulation that a lot of people are kind of theorizing.

• 23:54Anthony Pompliano?

  What is, uh, what are you looking forward to most over the next, like, month, 30 days?

• 23:59Speaker 01

  In terms of markets or just like in life in general, you mean?

• 24:02Anthony Pompliano?

  No, markets.

• 24:04Speaker 01

  Oh.

• 24:07Speaker 01

  I think, I think it'll be interesting to see. Do we see follow through for the Fed, like from the Fed first of all? And the second thing is inflation, obviously, like, do we start to see at least like the month over month numbers start to peak? I think that could drive, although I think we both understand there's kind of this like relativity bias to that, right? But I think that could drive this like at least short term narrative of, oh, inflation has peaked. And, you know, I think a lot of politicians would kind of like try to like hammer that drum, especially as we,

• 24:44Speaker 01

  the Democrats are, you know, not, I don't like to get political, but you know, the fact is Democrats are, you know, facing a lot of, you know, political headwinds right now from inflation. So I think if that started to occur, I think that would be a narrative that would start to really kind of like get driven by, by those entities.

• 25:01Anthony Pompliano?

  Completely agree. All right, we gotta go, but can we get a, a quick plug? Where can people follow you on the internet?

• 25:08Speaker 01

  Sure, W Clemente I I on Twitter. You could check out our newsletter at Blackwater Intelligence.com. But thanks for having me on, Pomp, really appreciate it. And I'll see you next week.

• 25:19Anthony Pompliano?

  You're doing a fantastic job, my friend. I appreciate it very much. And next Friday, you'll be back.

• 25:26Speaker 01

  Absolutely.

• 25:26Anthony Pompliano?

  All right.

• 25:27Speaker 01

  You guys enjoyed that Miami weather. I'm, I'm missing it, man.

• 25:31Anthony Pompliano?

  You're moving here eventually. Bye.

• 25:33Speaker 01

  Yeah, eventually.

• 25:35Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job 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.