Bitcoin's price recently peaked at $65,000 before retreating, as two investor groups, long-term holders (LTHs) and short-term holders (STHs), sold into the rally. This selling pressure raises questions about the sustainability of the recent price recovery.

The recent surge in Bitcoin's value coincided with lower-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) figures, which eased fears of ongoing inflation and potential further Federal Reserve interest rate hikes. The CPI fell by 0.4% in June, resulting in an annual inflation rate of 3.5%, the most significant decline since April 2020. In contrast, the PPI increased by 5.5% year-over-year, though it was below the anticipated 6.2%.

In the wake of this economic backdrop, the likelihood of another rate hike in July appears lower, with the probability dropping to 10.2% from 24.6% just a week earlier, as indicated by the latest data from CME FedWatch. Despite these favorable macroeconomic indicators, Bitcoin's performance has softened, with a recent decline of approximately 0.13%, pricing at $64,720.

According to Glassnode, the selling pressure is primarily stemming from two investor groups: long-term holders are liquidating positions to cut losses, while short-term holders who entered at lower prices are realizing profits. "Two forces anchoring the rally: cycle-top buyers reducing losses and local-low buyers locking in gains," stated Glassnode, indicating that both buyer types are contributing to the selling phenomenon.

Looking at the broader picture, Glassnode also identified a noticeable easing of supply that previously met each rally, as the Relative Long/Short-Term Holder Realized Profit and Loss data reveals that the volume of sellers from long-term holders has plateaued. Historically, long-term holders selling at a profit have dominated market trends; however, that demand has dwindled significantly.

More recently, the pace of selling has shifted, as the Entity-Adjusted Long-Term Holder Realized Loss metric has shown a decline, suggesting a potential for price recovery as selling pressure eases.

This material is informational and does not constitute financial advice.