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. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price action and underlying market participation, noting that 'Bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' Trading volumes have dropped significantly, with bitcoin's weekly volume coming in 17% below average, while ether's volume fell 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen stating that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests 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, helping to push total April inflows to $2.5 billion. However, Thielen cautioned that the rally's structure remains fragile, with the market shifting from an actively traded environment to one where participants are largely on the sidelines.
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 over the coming week. Ethereum's market is showing an even weaker picture, with volumes dropping over 50% and derivatives positioning showing limited appetite for risk. Despite these signals, the setup is not outright bearish, with the risk of forced liquidations on the downside reduced due to limited leveraged long positions.
Thielen noted that 'near-term risk/reward is asymmetric to the upside if a catalyst emerges,' which may come from outside the crypto space, with macroeconomic developments being a key factor in determining direction in the days ahead.