Bitcoin nears $65,000 as investors sell to take profits after U.S. inflation data shows lower-than-expected rates.
As Bitcoin nears $65,000, two investor groups are taking advantage of the price rise by selling their holdings.
Bitcoin is approaching the $65,000 mark, spurred by positive inflation data from the U.S., which has prompted two distinct groups of investors to sell and realize profits. The cryptocurrency has surged from $61,500 to nearly $65,000 this week following the release of June's consumer price index (CPI), which showed an annual increase of only 3.5%, well below the expected 3.8%.
The first group of sellers consists of long-term holders, defined as those retaining their assets for at least five months. Many of these investors, who bought Bitcoin near its peak last year, are choosing to sell at a loss rather than risk further declines, indicating a lack of confidence in the sustainability of the current rally.
Meanwhile, short-term holders, who purchased Bitcoin at recent lows, are also cashing in, selling at a rate exceeding $4 million daily. This selling behavior mirrors patterns seen in May when Bitcoin briefly surpassed its 200-day average of $82,000.
The combined selling pressure from both groups is increasing market supply just as Bitcoin attempts to rise further, suggesting that many investors remain anxious about their past losses. According to analysts, as Bitcoin nears $66,000, long-term holders are realizing losses, while short-term holders are capitalizing on this rally to secure profits.
Despite the positive inflation data, some analysts caution against the longevity of this price increase. They argue that the recent drop in oil prices contributed significantly to the decrease in inflation rates, and the subsequent rise in oil prices could diminish the relevance of the current data. Ryan Lee, chief analyst at Bitget, noted that the CPI figure was influenced by a drop in gasoline prices, which has since reversed due to ongoing geopolitical tensions.
Jasper De Maere, an OTC trader at Wintermute, echoed this sentiment, emphasizing that while the inflation data is encouraging, broader market conditions remain unstable due to ongoing military actions in the region. He highlighted that the Fear & Greed Index remains low, indicating that investor sentiment is still cautious amid these uncertainties.
