The recent rise of Bitcoin towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted the disconnect between price movements and underlying market participation. Despite Bitcoin's 4.7% increase over the past week, the data tells a more cautious story. Trading volumes have decreased significantly, with Bitcoin's weekly volume 17% below average and ether's volume down 20%.
Funding rates, which measure leveraged positioning, remain deeply negative, indicating that the price increase 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. Institutional flows have been a positive factor, with Bitcoin ETFs recording nine consecutive days of inflows, resulting in total April inflows of $2.5 billion. 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 markets also support 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 situation is similar, with even weaker participation and a significant drop in volumes.
Despite these signals, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations. The key factor that could determine the direction of the market in the coming days is macroeconomic developments, and for now, the bitcoin rally appears intact, but it may struggle to hold unless broader market conditions provide support.