Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. In a weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation. 'The recent 4.7% gain in bitcoin was accompanied by a cautious narrative beneath the surface,' he noted. Trading volumes have declined sharply, with bitcoin's weekly volume 17% below average and ether's volume down 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.' This suggests that the move higher was driven by spot buying or short covering rather than conviction-driven leveraged trades. Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion. 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.' 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 down over 50% and limited appetite for risk.
Despite these signals, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced. The emergence of a catalyst from outside the crypto space could determine the direction of the market in the days ahead, and for now, bitcoin's rally appears intact, but it may struggle to hold unless broader market conditions provide support.