Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volume 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 plummeted, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 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.' The move higher was driven by spot buying or short covering rather than leveraged long conviction, which tends to be less explosive than leveraged trades. Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, totaling $2.5 billion in April. However, Thielen warned 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.
The options market reinforces 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 weak participation, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. While the setup is not outright bearish, the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. The key factor that could determine direction in the days ahead is macroeconomic developments, and for now, bitcoin's rally appears intact, but may struggle to hold unless broader market conditions provide support.