Bitcoin's recent ascent towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives market performance raising concerns about the rally's sustainability. In his weekly report, 10x Research head Markus Thielen noted a discrepancy between the price movement and the underlying market participation, stating that 'Bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' Trading volumes have decreased significantly, 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 commenting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests that the price increase was driven by spot buying or short covering rather than conviction-driven leveraged trades.
Institutional investment has been a positive factor, with bitcoin ETFs experiencing nine consecutive days of inflows, totaling $2.5 billion in April, and bitcoin's dominance rising to 60%. 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 to the lower quartile of its historical range and traders expecting relatively modest price fluctuations in the coming week. Ethereum's market also exhibits similar characteristics, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite. Despite these signals, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations.
Thielen noted that 'near-term risk/reward is asymmetric to the upside if a catalyst emerges,' which may come from outside the cryptocurrency space, with macroeconomic developments potentially determining the market's direction in the near term.