The recent bitcoin price increase towards $80,000 is showing signs of weakness, with low trading volume and reduced derivatives activity raising concerns about the rally's sustainability. 10x Research head Markus Thielen noted a discrepancy between the price movement and the underlying market participation in a weekly report.
'Bitcoin rose 4.7% over the past week, but the accompanying data tells a more cautious story,' he wrote. Trading volumes have decreased significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%. At the same time, funding rates, which measure leveraged positioning, remain deeply negative. Thielen stated that 'funding rates fell 6.8% to the 3rd percentile, and volumes collapsed 33% to the 4th percentile,' adding that the price increase 'was driven by spot buying or short covering rather than leveraged long conviction.' This distinction is important, 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 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, describing a 'low-funding, low-volume regime that historically reflects hesitation rather than momentum.' Options markets support this view, with volatility falling into the lower quartile of its historical range and traders anticipating relatively modest price swings over the coming week. The market is pricing in a relatively calm environment, even as sentiment gauges approach elevated levels.
Ethereum presents a similar picture, with even weaker participation. Volumes have dropped more than 50%, and derivatives positioning shows limited appetite for risk. Despite these signals, the setup is not outright bearish, as the risk of forced liquidations on the downside is reduced due to limited leveraged long positions.
'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen wrote. This catalyst may come from outside the crypto space, with macroeconomic developments being the key factor that could determine direction in the days ahead. For now, bitcoin's rally appears intact, but without stronger participation, it may struggle to hold unless broader market conditions provide support.