The recent surge in bitcoin's price towards $80,000 is displaying indications of weakness, with reduced trading volume and decreased derivatives activity raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted a discrepancy between price movements and underlying market engagement. 'Despite bitcoin's 4.7% increase over the past week, the accompanying data tells a more cautious story,' he stated. Trading volumes have significantly decreased, with bitcoin's weekly volume 17% below average and ether's volume dropping by 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.' This suggests that the price increase was driven by spot buying or short covering rather than leveraged long conviction. Institutional demand has 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.' The options market reinforces this view, with volatility falling into the lower quartile of its historical range and traders expecting relatively modest price swings in the coming week.
Ethereum's market also shows a similar picture, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite. While the setup is not outright bearish, the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. 'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen wrote, suggesting that macroeconomic developments could be the key factor determining direction in the days ahead.