Two groups of bitcoin investors sell on the rise as U.S. inflation lifts prices to nearly $65,000

Bitcoin's price recently climbed to nearly $65,000 following softer-than-expected U.S. inflation data for June, which eased concerns about Federal Reserve interest rate hikes. The headline Consumer Price Index (CPI) rose 3.5% year-over-year, below the 3.8% forecast, while core CPI remained flat month-over-month. Producer price index figures also came in lower than expected, contributing to a weaker dollar and declining Treasury yields. These macroeconomic developments initially supported the recent bitcoin rally from around $61,500 earlier in the week.

However, two distinct groups of bitcoin holders are selling into this price strength, which may temper further upside momentum. Long-term holders—defined as wallets holding bitcoins for at least five months—who bought near last year’s highs are using the rally to cut losses rather than waiting for a full recovery. This selling signals waning confidence in the sustainability of the recent price rise. In parallel, short-term holders who bought near recent lows are taking profits at a rate exceeding $4 million per day. This combination creates substantial overhead supply just as the market attempts to break higher, indicating that market conviction remains fragile.

Market observers express skepticism about the durability of the inflation-driven bounce. Analysts point out that the June CPI slowdown was largely due to a significant drop in oil prices, which have since rebounded amid geopolitical tensions in the Strait of Hormuz. As such, the inflation data may be "obsolete" given July's developing conditions, including ongoing U.S. military activity against Iran. The overall risk environment remains unsettled, as reflected by the persistently low Fear & Greed Index, suggesting limited appetite for risk despite the recent positive news.

These dynamics imply that while bitcoin’s price rally has some macroeconomic support, profit-taking and strategic selling by both long-term and short-term holders could cap near-term gains. The evolving geopolitical backdrop and potentially higher inflation in coming months may introduce further volatility. Investors will be watching upcoming economic reports and geopolitical developments closely to assess whether bitcoin can sustain a breakout above $65,000 or face renewed selling pressure.