Bitcoin's recent push towards $80,000 has raised concerns about the rally's sustainability, with low trading volumes and subdued derivatives activity sparking questions about its endurance. Markus Thielen, head of 10x Research, highlighted a disconnect between the price movement and underlying market participation in a weekly report. 'Despite a 4.7% increase in bitcoin's value over the past week, the accompanying data tells a more cautious story,' he noted. Trading volumes have plummeted, with bitcoin's weekly volume 17% below average and ether's volume down 20%.
Funding rates, a measure of leveraged positioning, have also fallen sharply, dropping 6.8% to the 3rd percentile, while volumes have collapsed 33% to the 4th percentile. Thielen attributed the move higher to spot buying or short covering rather than leveraged long conviction, which is a key distinction as spot buying tends to be more stable but less explosive than leveraged trades. 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, with the market shifting from an actively traded environment to one where participants are largely on the sidelines. 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 over the coming week. Ethereum's market also shows a similar picture, with volumes dropping over 50% and derivatives positioning indicating 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 the key factor that could determine direction in the days ahead.