The recent surge of Bitcoin towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the rally's sustainability. In a recent report, Markus Thielen, head of 10x Research, highlighted the disparity between price movements and underlying market participation. "Despite Bitcoin's 4.7% rally over the past week, the data tells a more cautious story," he stated.
Trading volumes have dropped significantly, with Bitcoin's weekly volume 17% below average and ether's volume falling 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen noting that the move higher was driven by spot buying or short covering rather than conviction from leveraged long positions. This distinction is crucial, as spot buying tends to be more stable but less explosive than leveraged trades, leaving 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 and total April inflows reaching $2.5 billion.
However, Thielen warned 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 support 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 weakness, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite. While the setup is not outright bearish, with leveraged long positions limited, the risk of forced liquidations on the downside is reduced. The key factor that could determine the direction of the market in the coming days is macroeconomic developments, and for now, Bitcoin's rally appears intact, but it may struggle to hold unless broader market conditions provide support.