Bitcoin briefly approached $65,000 after the latest U.S. inflation readings came in cooler than expected and traders sharply pared back expectations for further Federal Reserve rate hikes. Even so, on-chain data shows that the move higher is meeting selling from both sides of the holder base, raising doubts about how far the rebound can run.
Glassnode says two groups are selling at once
According to on-chain analytics platform Glassnode, long-term holders and short-term holders are both distributing Bitcoin at the same time, creating what it described as an unusual double layer of sell pressure.
For long-term holders, many of these investors entered near last year’s higher price levels. The report said they have shown limited confidence in Bitcoin’s recent advance and do not appear convinced that the move can last. As a result, some are choosing to exit at a loss during the rebound rather than continue to hold through the possibility of a deeper drawdown.
Short-term holders are acting for a different reason. This group, much of which bought near recent lows, has started to take profits more aggressively. Glassnode said short-term holders are currently realizing more than $4 million in profit each day. It added that the scale of this selling pressure is comparable to conditions seen in May, when Bitcoin rebounded above its 200-day moving average near $82,000 and ran into a similar wave of profit-taking.
Selling pressure builds as Bitcoin nears the mid-$60,000 range
With long-term holders focused on cutting losses and short-term holders locking in gains, both streams of supply are arriving while Bitcoin is trying to push through higher levels. That has left the market with a sizable amount of overhead supply to absorb.
A Glassnode analyst said, “As Bitcoin approaches $66,000, realized losses among long-term holders are rising noticeably. Many investors who bought near the bull market peak are using the narrower loss window to finally exit, rather than keep waiting for a market recovery. This sell-into-strength behavior shows that confidence among underwater long-term holders is gradually wearing out.”
Cooler inflation data helped lift Bitcoin from $61,500
Earlier this week, Bitcoin rebounded from $61,500 to nearly $65,000 after U.S. inflation data came in below expectations. Most of that move took place after Tuesday’s data release.
The report cited June U.S. consumer price index data showing annual CPI at 3.5%, below the market estimate of 3.8% and lower than prior months. Core CPI, which excludes food and energy, rose 2.6% year over year and was flat on a monthly basis.
Producer price index data, which reflects upstream inflation pressure, also came in below market expectations. That added to the market view that the Fed may face less pressure to raise rates again. Following the data, the U.S. Dollar Index fell about 0.5% this week to 100.48, while Treasury yields also moved lower, helping risk assets including Bitcoin recover.
Bitget and Wintermute urge caution
Not everyone sees the inflation-driven bounce as a durable shift. Bitget chief analyst Ryan Lee said the June CPI slowdown was driven in large part by a roughly 10% drop in oil prices during the month, but that decline had already fully reversed before the report was published.
Lee said, “June’s 3.5% CPI was driven to a large degree by an about 10% drop in oil prices during that month, but that move had already completely reversed before the report came out. Brent crude has now climbed to a one-month high, and tensions in the Strait of Hormuz are also rising. The market is cheering June’s data while overlooking the possibility that July inflation could be pushed higher by the conflict.”
Wintermute OTC trader Jasper De Maere also called for caution. He said the inflation report was constructive, but the broader macro picture is still far from clear.
He said, “While the inflation data does offer a constructive positive signal, U.S. military strikes on Iran have now entered a fourth consecutive day, and the Fear & Greed Index has only edged up from 22 to 25, which still leaves the market in extreme fear.”
De Maere added that with military tensions still escalating, one soft CPI report is not enough to establish a lasting structural change in market risk appetite.