Bitcoin's recent push towards $80,000 is showing signs of weakness, with declining trading volumes and subdued activity in the derivatives market raising concerns about the rally's sustainability. In his weekly report, 10x Research head Markus Thielen highlighted the disconnect between the price movement and the underlying market participation.
'Despite a 4.7% increase in bitcoin's value over the past week, the accompanying data tells a more cautious story,' he noted. Trading volumes have plummeted, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Funding rates, which measure 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.' This suggests that the recent price increase was driven by spot buying or short covering rather than a surge in leveraged long positions.
While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, the rally's structure remains fragile. Thielen warned that 'the market has shifted from a more actively traded environment to one where participants are largely on the sidelines,' describing 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 pricing in relatively modest price swings over the coming week.
Ethereum's market also paints a similar picture, with volumes dropping over 50% and derivatives positioning showing limited risk appetite. Despite these signals, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations on the downside. However, the market's direction in the days ahead may be determined by macroeconomic developments, and bitcoin's rally may struggle to hold unless broader market conditions provide support.