Bullish bets targeting $70,000 for Bitcoin are rising again. But it is repeatedly failing to break higher due to a supply wall of 1.79 million BTC stacked near $65,000.

On Aug. 13, blockchain media outlet CryptoSlate reported that Bitcoin has been trapped in a $63,000 to $65,000 range for the past three weeks and failed to establish a clear direction even after the release of the U.S. July consumer price index (CPI).

July CPI rose 0.1 percent from the previous month and 3.4 percent from a year earlier. Core inflation rose 0.2 percent month on month and 2.5 percent year on year. The annual rise matched market expectations, but Bitcoin's price reaction was limited. Bitcoin traded around $63,500 that day.

The interest-rate market showed a similar reaction. The probability of a U.S. Federal Reserve (Fed) rate hike in September fell only slightly, to about 42 percent from about 46 percent before the inflation release. Ryan Lee (라이언 리), chief analyst at Bitget Research, assessed that the data "neither triggered a hawkish reassessment nor provided a clear dovish catalyst". The analysis is that monetary policy expectations are also failing to provide a clear direction for Bitcoin.

The trend was clearer in the derivatives market. Deribit data showed open interest of about $1.1 billion in call options with a $70,000 strike price and about $1.0 billion in put options with a $60,000 strike price.

The derivatives market maintained both upside bets and downside defenses. Crypto options platform Laevitas said that after Aug. 12, $70,000 call options expiring on Sept. 25 were the main trade on Deribit, and investors bought contracts totaling 2,026 BTC for about $2.58 million.

But demand for downside protection has not disappeared. Andrei Grachev (안드레이 그라체프), managing partner at DWF Labs, said that even after the inflation release, downside strikes around $60,000 remain higher than upside strikes around $70,000. That suggests that while the options market is again reflecting upside potential, pricing itself remains defensive.

In the spot market, the supply wall is acting as a more direct constraint than those options-market expectations. Bitfinex estimated that the realized cost basis of about 1.79 million BTC, equivalent to 8.93 percent of circulating supply, is concentrated in the $62,000 to $65,000 range. The largest concentration is near $63,800. Because holders are approaching breakeven at that level, selling is likely to emerge each time Bitcoin rises toward the upper end.

Bitcoin traded above $65,000 for six consecutive sessions from Aug. 5 to Aug. 10, but failed to settle above that level on a daily closing basis. Bitfinex said holders near breakeven are seizing another chance to exit, bringing supply back.

That has clarified the near-term focus for Bitcoin. In the options market, expectations of a return to $70,000 are forming again, but in the spot market it must first break above resistance at $65,000. Until then, demand to defend $60,000 and the burden of supply around $65,000 are likely to keep the market pinned at the same time.

July's CPI report looks good enough for the FOMC to keep policy unchanged next month. The 0.22% rise in the core CPI looks consistent with an increase in the core PCE deflator of 0.16%. Some of the momentum in the CPI was in components (such as airline fares and medical care… pic.twitter.com/Ee7AzV2W4Q