Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives action raising concerns about the rally's sustainability. In his weekly report, 10x Research head Markus Thielen highlighted the disconnect between the price movement and the underlying market participation, stating that 'Bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' Trading volumes have declined significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen noting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' The move higher was driven by spot buying or short covering rather than leveraged long conviction, which leaves the market without the momentum typically seen in strong bull runs.
Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, helping 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 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.
The market is pricing in a relatively calm environment, even as sentiment gauges approach elevated levels. Ethereum presents a similar picture, though with even weaker participation, and the setup is not outright bearish, with the risk of forced liquidations on the downside reduced. The 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 the key factor that could determine direction in the days ahead.