Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted derivatives activity raising concerns about the durability of the rally. 10x Research head Markus Thielen notes a disconnect between price action and underlying market participation, with bitcoin rallying 4.7% over the past week despite cautious underlying data.
Trading volumes have dropped sharply, with bitcoin weekly volume 17% below average and ether volume falling 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen stating that the move higher was driven by spot buying or short covering rather than leveraged long conviction. Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion. However, Thielen cautions that the rally's structure remains fragile, with the market shifting to a low-funding, low-volume regime that historically reflects hesitation rather than momentum.
Options markets also reinforce this view, with volatility falling into the lower quartile of its historical range and traders pricing in relatively modest price swings. Ethereum's market also shows weak participation, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. While the setup is not outright bearish, with leveraged long positions limited, the risk of forced liquidations on the downside is reduced, and near-term risk/reward is asymmetric to the upside if a catalyst emerges.
Macro-economic developments are likely to be the key factor determining direction in the days ahead.