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 weekly report, 10x Research head Markus Thielen highlighted a disconnect between price movement and underlying market participation. 'Bitcoin rose 4.7% over the past week, yet the data tells a cautious story,' he wrote. Trading volumes have dropped significantly, with Bitcoin's weekly volume 17% below average and ether's volume down 20%.
Funding rates, a measure of leveraged positioning, remain deeply negative. Thielen noted that the move upwards 'was driven by spot buying or short covering rather than leveraged long conviction.' 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 aspect, 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 to a 'low-funding, low-volume regime that historically reflects hesitation rather than momentum.' Options markets reinforce this view, with volatility falling into the lower quartile of its historical range and traders expecting relatively modest price swings. Ethereum presents a similar picture, with volumes dropping over 50% and derivatives positioning showing limited risk appetite. Despite these signals, the setup is not entirely bearish, with the risk of forced liquidations reduced due to limited leveraged long positions.
'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen wrote, highlighting macroeconomic developments as a key factor that could determine direction in the days ahead.