The recent bitcoin price surge towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the rally's sustainability. A weekly report by 10x Research head Markus Thielen highlights a disconnect between the price action and underlying market participation, with bitcoin's 4.7% weekly gain accompanied by cautious underlying data. Trading volumes have dropped significantly, with bitcoin's weekly volume 17% below average and ether's volume 20% below average.
Funding rates, a measure of leveraged positioning, remain deeply negative, with a 6.8% drop to the 3rd percentile. Thielen notes that the move higher was driven by spot buying or short covering rather than leveraged long conviction, which tends to be less explosive.
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 similar signs of low participation, with volumes dropping over 50% and derivatives positioning showing 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. Thielen notes that 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 a key factor in determining direction in the days ahead.