HODLers Are Selling. But Here's How $400K Still Happens

Something unprecedented could be unfolding in the bitcoin market. Woody Wertheimer, who has nearly a decade of experience working with bitcoin technology, says long time holders have sold most of their coins to a new kind of buyer. And this buyer is not selling.

We're basically at the very tail end of old holders rotating out and selling their bitcoin. Saylor cannot sell. If he sells bitcoin, his company is done. I think 400k is conservative.

To dig deeper into Udi's thesis and what it might mean for the price of btc. We sat down with him in our latest interview. Before we dive in. This is just one point of view, not financial advice. Always do your own research before investing in crypto. I'm Giovanni. Let's get into it.

You know, we have Wall street and institutions that has been, not, not just for the last month or two but for the last five years they've been buying out old holders of bitcoin. Both, both kind of old bitcoin maxis, but also a lot of people who are more kind of diverse in their crypto portfolios but always had some portion of bitcoin and have been selling it over time to get into ETH or Solana or whatever. I think people's percentage and you see that all over ct you see that when you talk to crypto funds, you see that everywhere. People's percentage of bitcoin holding has only gone down because the assumption people have is that, you know, the kind of crazy multiples that bitcoin does are behind us and you know, maybe it'll go up 10, 20% a year or something like that and they can do better than that. So they've all, they've all sold this entire time. The thing is the new buyers are not selling. We've got new buyers that are not like Sailor cannot sell. If he sells bitcoin, his company is done. So he's going to do anything he can to not do that. And more than, you know, more than being, more than not selling, he's also a new type of, of buyer that we never had. He's a forced buyer. If Sailor stops buying bitcoin for a sustained period of time, his company loses all of its value. The only value proposition of Microstrategy is that it buys bitcoin all the time. So he has to keep coming up with more new, original ways to raise capital to buy bitcoin. Over the last five years he came up, he always has to come up with new schemes in order to arrange to raise capital. He can't do the same thing and he consistently has successfully done it so far. We've never had someone who has to buy no matter what. So this changes like the way, the way to look at this market I think and I think what we're seeing, I think we're basically at the very tail end of old holders rotating out and selling their bitcoin. Of course there's a lot of other holders that still hold it, but I think the people who wanted to sell generally sold around the 100k line.

When you say that the old holders have been mainly selling because they saw, okay, we are at 100k, there is not much room to go. So it's better if we, if we sell around here. Is that just a sense that you have or it's like backed up by some on chain data. Any other, any data supporting this thesis besides this general observation?

Yeah, so some of it is anecdotal and not really, you know, it just points to a trend maybe, but not really more than that. For example, you know, we saw that there was a big, big holder I think a couple of weeks ago that sold 80,000 BTC. That's I think $8 billion more, almost $10 billion that that he liquidated on chain about two weeks ago. So that was a kind of a big one. Based on conversations that I'm having with a lot of friends that I know that are old holders, they're all basically telling me that, you know, either they sold recently a big chunk and they regret it or they sold a big chunk and they think it was a good idea because they think it's the top. But I'm seeing a lot of this now that's all anecdotal. If you want hard data, one of the most obvious things is just look at the inflows to the ETFs and look at sailors purchases over the last, let's say year, year and a half. We're talking about tens of billions of dollars. And what's interesting there, for the first time we didn't have that in the past, but for the first time we have clear buyers and they're trans. So they're telling us how much they're buying and how much they're selling. So we know that they've accumulated insane amount of bitcoin and the price didn't go up that much. What does that tell us? That a lot of, you know, a lot of people sold at those levels. Right. So we, we, we just know for a fact that that, that, that there's been A lot of selling that has gone into this sort of black hole that, that, you know, doesn't, that doesn't, doesn't release those bitcoins it went into. That was not the case in the past.

Yeah, those, those are fair points. I just have another concern here, because you seem to see these bitcoin treasury companies, like Saylor, for example, sort of force buyer, as you mentioned, so entities that are just continuously buying without selling. Not all these companies are the same. There are many of them that are in this period of time, they are accumulating, but they do not have the same track record as a seller, which is sort of the gold standard in this practice of Bitcoin treasury companies. So there, there is a lot of concern that essentially not all these treasury companies are trustworthy and some of them could actually engage in some risky practices and at the end of the day, being forced to sell some of their assets. As you mentioned, there are a few entities scooping up increasingly bigger amounts of bitcoin. So don't you think that this trend could, on the opposite, create a fragility in the market itself?

Yeah, for sure, 100%, you're totally right. It can happen. I would go as far as to say that some, you know, there's almost no doubt that some of those new treasury companies inevitably will definitely implode eventually, because what's going to happen, they're going to try to find a way to catch up to MicroStrategy. MicroStrategy is huge. They're sitting on over half a million coins. It's almost impossible to catch up to them. But people are going to try and to do that. They're going to take more and more risk and more and more leverage, and they're going to take debt. And then as soon as bitcoin turns, they're going to have a problem. And I think it's inevitable that some of them will blow up. But a few things on that. One, I don't think we're there yet. I think while this can happen, I think it will take a while before it happens. Two, I think this is going to happen to those companies that are smaller. Um, and for now, they're small. So if, if, you know, if, if every other bitcoin treasury company, other than strategy, blows up tomorrow, all of them together, it's, it's actually not going to be much bigger of an impact than one that, that one whale that sold 80,000 Bitcoin. Right. It's, it's. Right now, it's, it's very limited. It could become a problem later. If they accumulate more and more bitcoin, we can talk about it again in like a year. But right now their size is just not enough to, to, to cause a significant concern strategy as we stand today, if you look at their financials, are very healthy. The balance sheet for microstrategy is incredibly healthy. I don't think there's anything to worry about. Even if Bitcoin took a 50% dip today, 60%, 70%, they're still going to be fine. So I don't think we're at the stage yet where this is a concern. But definitely, I would say anyone who's kind of involved in a bitcoin market, it's a very good idea to track these companies very closely because basically every bullish and bearish scenario is going to start there. So this is what you want to.

Pay attention to as an outcome of your thesis. You were predicting that bitcoin has a chance to reach 400k by the end of the year. Why do you look at this specific benchmark?

I think 400k is conservative. You know, imagine that in two weeks Bitcoin goes to 150k. I think that's very feasible. Some people say that they think 150k is the target for the end of the year. I think it could happen very, very quickly. Right. It's really not far from there. I think people wanted to sell bitcoin. You know, they already sold at 110. I don't think there's a lot of people who are like eager to sell at 130. So I think 150 can actually happen very, very quickly. Once that happens, you know, that's where I would expect like CT natives to start piling on. They're probably, they're saying like 150. Everyone was saying 100 happen by the end of the year. So they start piling on in 150 because they're panicking they're going to miss it. And then, you know, a month or two from there, we could hit 200. Right? Because there's just all this momentum of everyone buying into bitcoin. When we hit 200, I think 200 is the kind of, that's the moment where retail really wakes up. Right now, I think we're not seeing a lot of retail. When we hit 200k, that's when every single person in the world is like, wait, you know, they're thinking back to the headlines that they read. You know, six months ago, they didn't just hit 100, 100K and it doubled in like five months. And then I think basically every human on the planet is starting to think, well fuck, what if it doubles again? I gotta get some. So it's just this round number and then once that happens and people see how quickly that happens, Suddenly the number 400k doesn't sound big anymore. People are like, oh, that's just another 2x. So I actually think what I love about the number 400k is that it sounds ridiculously crazy right now and it actually doesn't take a lot to flip into a low conservative estimate. So that's why I think it's like a pretty good target.

What I wanted to now jump into is another short conversation about the second largest cryptocurrency. So Ethereum. We saw that in the last few years Ethereum performed terribly. It was even deemed dead at a certain point. But now in the last few weeks we saw that there is an Ethereum comeback.

So it's basically for. So first of all, I wouldn't want to, and I said that in that article too, I wouldn't want to fade. Joe Lubin and Tom Lee, I think they're great guys and I think what they're doing is the right move for Ethereum. I think where I stand that is different from where most crypto natives think is that I just think it's going to take a lot longer than people expect because again, it took Michael Saylor five years to buy out a significant kind of portion of the holder base for Bitcoin. And you know, how, how, how high ETH goes is not, is not necessarily the question if, if, if we're looking. So I'm looking at, you know, not a 50% move for Bitcoin. I think Bitcoin is going to 10x within, you know, a few short years. And in order for ETH to do the same thing, it's going to need to, these guys are going to need to buy out a lot of old holders. I think if you look at, of Ethereum right now, I think you'll see that a lot of, a lot of people still hold it from, from basically the previous tops. So I think there's going to be just a lot of work to buy these guys out. And like I said in the article, ETH can and will have, you know, these kind of bursts of outperformance just because it moves much more. It's, it's kind of much more sensitive to capital. When capital goes into eth, it moves much more dramatically than bitcoin will. But this process of doing that sustainably is, is the process that you build. It doesn't kind of start in two weeks, so I think it's going to take longer. That's, that's just my assumption. We're going to see ETH outperforming every once in a while. But I think to really kind of break through and see the same kind of returns that I'm expecting on Bitcoin, it will need to first kind of chew through a lot of resistance.

So you're basically saying that Bitcoin will 10x quicker than Ethereum.

That's what I would expect, yeah.

Tom Lee is expecting Ethereum to even flip the market cap of Bitcoin. He's expecting a very serious price appreciation for Ethereum due to this new trend of Ethereum treasury companies. One of the reason for that is that they offer a competitive advantage compared to their Bitcoin counterparts. So Ethereum offers essentially staking yields which are not available for Bitcoin. So what do you think about that? Wouldn't that offer a strong competitive advantage to these treasury companies?

I think if you're looking at the Ethereum treasury companies, I think what's appealing there, what is appealing and is bullish, is that the Ethereum market is structurally changing from no one is buying this, which was the reality up until like a month ago, to there's these two big buyers and maybe there will be more who are just, you know, piling cash from, from tradfi into eth and the inflows are just substantially larger than they were before. So that kind of demands repricing of the asset. And that is very bullish. This transition from no one is buying it to big players are buying it. That, that is bullish. The yield thing, I think it's a nice thing to say on CNBC. I don't think it's actually a 3% yield. When ETH went down 70% against BTC, the 3% yield did not help anyone. And when ETH outperforms BTC 30% in a day, nobody cares about 3% a year. So I think the yield is kind of like. It's a nice talking point. I don't think it really changes anything. What is bullish is this regime where we go from no buyers whatsoever to big institutional buyers. We outperform as long as they kind of beat expectations. But then as the market starts to readjust expectations, I think that kind of slows down. Another kind of interesting thing to consider, what happens, let's say that Bitcoin has. Whatever maybe you think it's not today. Maybe in a month. Bitcoin has a sustained period of outperformance and it goes up, you know, let's say 30% in a week. Everyone is going crazy about it. Maybe it hits this threshold of 200k and everyone's. Everyone's very excited in the retail world. And then one Ethereum treasury company decides to do a little shift and add some bitcoin to his treasury, right? They're doing an experiment because the market is excited. They're like, you know what? Now we're Ethereum and Bitcoin treasury company. And then because everyone is excited about Bitcoin at that moment, the stock for that company goes up a lot the next day, right? Because everyone is like, oh, bitcoin is this great thing. So if. If one company does it and their stock performs well, then now the other ones kind of have to do it too, right? They're like, well, an Ethereum treasury company's stock goes up when they buy bitcoin, so we need to do it as well. The same is not true. The same is not true for MicroStrategy. MicroStrategy will never buy. Will never buy Ether. Because, Sailor, I believe that Fuli is a true, honest to God, bitcoin maximalist and he's just not going to do that. Is Tom Lee not going to buy Bitcoin if he thinks that that will make the company perform better? I think he will. I think he's a wise guy. So we've learned that kind of asymmetry there. I think people are not fully pricing in the kind of reflexivity that bitcoin has.

Thanks a lot, Udi. It was a cool conversation. Hope to see you soon in our show.

Awesome. Thank you.