“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.

Some observers remain skeptical of the sustainability of this inflation-led bounce, arguing that the collapse in oil prices mainly drove the slower growth in the cost of living in June and that the recent bounce in oil makes that data obsolete.

“The 3.5% [CPI] number was driven by a 10% drop in gasoline through June, and that move had already reversed before the report was published, with Brent at a one-month high as the Hormuz situation escalates,” Ryan Lee, chief analyst at crypto exchange Bitget, said in an email.

“Markets are rallying on a June photograph, while July develops differently, and the July print will be the first to carry the war premium,” Lee added.

Jasper De Maere, OTC trader at lading market maker Wintermute, also called for caution, while acknowledging inflation-led bounce and profit-taking near $65,000.

“While the inflation data is genuinely constructive and while positive headlines are very refreshing, it’s worth noting the backdrop hasn’t cleared with U.S. strikes on Iran are into a fourth consecutive day, and the Fear & Greed Index only moved from 22 to 25, still Extreme Fear. One soft CPI print against an active military escalation is not the same as a durable regime shift in risk appetite,” he said in an email.

“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.

Some observers remain skeptical of the sustainability of this inflation-led bounce, arguing that the collapse in oil prices mainly drove the slower growth in the cost of living in June and that the recent bounce in oil makes that data obsolete.

“The 3.5% [CPI] number was driven by a 10% drop in gasoline through June, and that move had already reversed before the report was published, with Brent at a one-month high as the Hormuz situation escalates,” Ryan Lee, chief analyst at crypto exchange Bitget, said in an email.

“Markets are rallying on a June photograph, while July develops differently, and the July print will be the first to carry the war premium,” Lee added.

Jasper De Maere, OTC trader at lading market maker Wintermute, also called for caution, while acknowledging inflation-led bounce and profit-taking near $65,000.

“While the inflation data is genuinely constructive and while positive headlines are very refreshing, it’s worth noting the backdrop hasn’t cleared with U.S. strikes on Iran are into a fourth consecutive day, and the Fear & Greed Index only moved from 22 to 25, still Extreme Fear. One soft CPI print against an active military escalation is not the same as a durable regime shift in risk appetite,” he said in an email.