Bitcoin's recent ascent towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the rally's sustainability. According to 10x Research head Markus Thielen, the disconnect between the price movement and market participation is a cause for caution. Despite a 4.7% increase in bitcoin's value over the past week, the underlying data tells a more subdued story.
Trading volumes have plummeted, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Furthermore, funding rates, which measure leveraged positioning, remain deeply negative, indicating that the rally is being driven by spot buying or short covering rather than conviction from leveraged traders. 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. While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, the rally's structure remains fragile.
Thielen warns that the market has shifted to a low-participation environment, which 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.
Ethereum's market also shows weak participation, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. Although the setup is not outright bearish, with limited leveraged long positions reducing the risk of forced liquidations, the rally's sustainability depends on stronger participation or broader market support.