Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives market participation raising questions about the rally's sustainability. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and underlying market engagement. 'Despite bitcoin's 4.7% gain over the past week, the accompanying data tells a more cautious story,' he noted. Trading volumes have declined sharply, 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 move higher was driven by spot buying or short covering rather than conviction from leveraged long positions. Institutional demand has been a positive factor, 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 to 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. While the setup is not outright bearish, with leveraged long positions limited, the risk of forced liquidations on the downside is reduced.
'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.