As macro tailwinds lift bitcoin $BTC$64,532.45, two distinct groups of investors are selling into strength, potentially slowing the ascent.
The first are long-term holders, which Glassnode defines as addresses/wallets that tend to hold for at least five months. Long-term holders, who bought near highs last year, are capitulating, or using the bounce to sell their coins at a loss rather than holding through deeper drawdowns. This signifies a lack of confidence in the sustainability of the latest $BTC price rise.
Suggesting the same are short-term holders, who scooped up coins near the recent lows. They are currently realizing profits at a pace exceeding $4 million per day in a selling wave reminiscent of what was seen in May, when $BTC briefly rose to its 200-day average above $82,000.
The result? Simultaneous selling from both is likely creating overhead supply exactly as the market tries to break higher. It's an indication that conviction remains shaky among those still underwater from earlier in the cycle.
"As price rallies toward $66k, LTH realized loss volume is spiking! Cycle-top buyers are using the relief rally as an exit opportunity, locking in losses at a smaller margin than the sub-60k lows allowed. Selling into strength rather than waiting for recovery is a pattern consistent with exhausted conviction among underwater long-term holders," the analyst added.
"Adding to the sell-side pressure from LTH loss realization, short-term holders who bought near the recent lows are now taking profit at volumes last seen close to the peak in May," the analyst added.
$BTC has bounced this week to nearly $65,000 from $61,500, with most of the gains occurring on Tuesday after U.S. consumer price inflation came in softer than expected. Headline CPI rose just 3.5% year-over-year in June, missing the 3.8% consensus forecast and marking a notable cooldown from prior months. Core CPI, excluding food and energy, came in at 2.6% YoY with a flat reading month-over-month.
June's producer price index, offering cues on inflation in the pipeline, also came in lower than expected. Both reports eased fears of Federal Reserve interest rate hikes, sending the dollar index lower, down half a percent to 100.48 this week. Treasury yields have dropped as well.