Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. Markus Thielen, head of 10x Research, notes that despite a 4.7% increase in bitcoin's price over the past week, the underlying market data tells a more cautious story. Trading volumes have dropped significantly, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%. Additionally, funding rates, which measure leveraged positioning, remain deeply negative, indicating a lack of conviction among investors.
Thielen attributes the price increase to spot buying or short covering rather than leveraged long positions, which tends to be less explosive and leaves the market without momentum. While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, the rally's structure remains fragile.
The options market also reinforces 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 more than 50% and limited appetite for risk. Despite these signals, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. However, the rally may struggle to hold unless broader market conditions provide support, with macroeconomic developments being a key factor in determining direction in the days ahead.