July’s consumer inflation cooled to 3.4% on August 12, and producer prices came in unchanged the next day against the 0.2% rise economists expected. Cooling inflation gives the Federal Reserve room to stop raising rates, and cheaper money is what usually sends the Bitcoin price higher.
However, Bitcoin (CRYPTO:BTC) fell on both prints, dropping from an intraday high of $65,234 to $63,304 after the consumer numbers, while the Nasdaq and S&P 500 both climbed on the same news. So why is Bitcoin dropping when the news is finally going its way?
How Far Bitcoin Has Fallen This Year
Bitcoin is worth roughly $1.28 trillion today, about half what it was worth at its $126,000 record last October, and the Bitcoin price is well below the $119,400 it traded at this time last year.
At the start of January, Bitcoin traded at $88,764. It fell 34% over the next six months and closed June at $58,566, its lowest in 21 months. A Federal Reserve that kept talking about raising rates did most of that damage, while $4 billion left the spot Bitcoin ETFs in June, which was their worst month on record.
Between 45% and 46% of all Bitcoin is now worth less than what its buyers paid, which is roughly 9 million coins. Anyone who bought in the last six months paid $68,700 on average, according to Glassnode, so they are down 7.2% and they sell whenever the price climbs back toward what they paid. That is why Bitcoin has been stuck between $58,000 and $68,000 since June.
The BTC price has dropped below every moving average traders watch, including the 200-day near $71,900, over seven months. Perpetual futures trading has since fallen to a three-year low, and the Fear and Greed Index reads 29, which shows the market is in fear.
Why Soft Inflation Data Didn’t Help Bitcoin
Consumer prices rose 3.4% in the year to July, down from 3.5% in June, with core inflation easing to 2.5%. Producer prices then came in unchanged for the month against an expected 0.2% rise, and the annual figure dropped to 4.7% from 5.5%. Producer prices are what factories and suppliers charge, so flat readings there usually mean consumer prices follow, and both together should have lifted the Bitcoin price.
However, Bitcoin barely reacted. It had already fallen from an intraday high of $65,234 to $63,304 after the consumer print, and the producer numbers the next day did nothing to stop it.
According to Glassnode, a weak response to good news is also a warning. Buyers waiting on the sidelines buy when the reason they were waiting for arrives, so a market that stays flat on good data is short of buyers rather than short of reasons.
Moreover, traders have cut the odds of a September rate hike to 32%, down from above 75% a month ago. They now put the chance of a pause at 63% after payrolls shrank by 23,000 in July. So the short-term pressure has eased, but the odds of tighter policy by year-end are still near 70%, which means the market expects rates to go up before December.
Who Is Selling Bitcoin Right Now
Steady ETF inflows are being cancelled out by over-the-counter selling from miners and Strategy. ETFs buy on the open market, where each purchase pushes the Bitcoin price up, while OTC sales happen privately in large blocks that never reach the order book, so the buying shows in the price and the selling does not.
Miners are selling because renting out computing power to AI companies pays better than mining does. Many are converting Bitcoin revenue into data centre buildouts, and that shift has added $1.78 billion in selling this year.
Strategy sold 1,690 BTC between August 3 and 9 at an average price of $64,262. That was its fourth disclosed sale of 2026 and takes the year’s total to 6,948 BTC. Its remaining 840,447 BTC were bought at an average of $75,385, so the company is selling $11,000 below its own cost. Crypto exchange Bullish is in the same position, reporting a $280 million quarterly loss driven mostly by a $244.6 million markdown on its Bitcoin holdings.
The ETF demand pushing against all that has been inconsistent. Spot Bitcoin funds took in $853 million in the week to August 7, their strongest week since April, then gave back $144.6 million on August 10 and another $61 million on August 12. Across 2026 those funds are $4.5 billion in net outflows.
However, the biggest holders have been buying through all of it. Wallets holding more than 1,000 BTC reached a 2026 high of 3.06 million bitcoin on August 8, worth around $196 billion, which means whales added supply while miners and corporate treasuries sold.
Bitcoin Price Prediction for the Rest of 2026
The Bitcoin price could hold between $60,000 and $66,000 heading into September, and if it breaks that range, it more likely breaks lower. September hike odds have fallen to 32%, but traders still price tightening by year-end at near 70%. That takes away the rate cut which has rescued Bitcoin from every previous stretch like this.
The Senate votes on the CLARITY Act on September 15, and a failure there removes the last regulatory catalyst of 2026. The Federal Reserve then meets the day after, where a hawkish statement would confirm tighter policy is coming and keep buyers away through Q4.
Some analysts expect the Bitcoin price to break below $60,000 and reach $55,000 before the cycle low forms. Others argue the bottom is already in, pointing out how little the Coldcard hack and the CLARITY Act delay moved the price. The weekly RSI, which measures whether selling is speeding up or slowing down, has been rising even as the price fell, and that has happened before previous recoveries.
Contact [email protected] for any questions or corrections.