Bitcoin Nears $65,000 After Softer US CPI, as Selling by Long- and Short-Term Holders Caps Gains

Bitcoin rebounded to near $65,000 after softer US consumer inflation data, but the advance is losing momentum as both long-term and short-term holders sell into the rally.

CoinDesk reported on July 16 that Bitcoin has climbed this week from $61,500 to the $64,000 range. Most of the gain came on Tuesday after June US consumer price index data came in below market expectations.

The June CPI rose 3.5% from a year earlier, below the 3.8% expected by the market. Core CPI, which strips out food and energy, increased 2.6% from a year earlier and was unchanged from the previous month. June producer price index data also came in below forecasts.

The softer inflation readings eased concern about further Federal Reserve rate increases. The dollar index fell 0.5% to 100.48, while US Treasury yields also moved lower.

Even so, selling by both long-term and short-term holders has picked up during Bitcoin's rebound. Glassnode said some long-term holders — defined as investors who have held Bitcoin for at least five months — bought near last year's highs and are using the recent bounce to lock in losses.

Short-term holders who bought near the recent lows are also taking profits. Their realized gains are now exceeding $4 million a day. That is similar to the selling seen in May, when Bitcoin briefly rose above its 200-day moving average of $82,000.

As Bitcoin approaches $66,000, realized losses among long-term holders are surging, a Glassnode analyst said. Investors who bought near the cycle peak are using the rebound as an opportunity to exit. The pattern suggests conviction is fading among long-term holders still under water.

Some analysts are also questioning how durable the rally will be despite softer inflation. Ryan Lee, chief analyst at Bitget, said the 3.5% CPI reading was driven by a 10% drop in gasoline prices in June, but that decline had already reversed before the report was released. He added that with tensions in the Strait of Hormuz intensifying and Brent crude reaching a one-month high, July inflation data are set to reflect a war premium.

Jasper De Maere, an over-the-counter trader at market maker Wintermute, said the inflation data were positive on their own. But US airstrikes on Iran have entered a fourth day, and the fear-and-greed index remains in extreme fear territory at 22 to 25. One softer inflation reading does not signal a structural shift in risk appetite amid rising military tensions.