Bitcoin's recent push towards $80,000 is showing signs of weakness, with declining trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. According to a weekly report by 10x Research head Markus Thielen, the disparity between the price movement and the underlying market participation is a cause for concern.
"Despite bitcoin's 4.7% gain over the past week, the underlying 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%. Furthermore, funding rates, which measure leveraged positioning, remain deeply negative.
Thielen pointed out that the increase was driven by spot buying or short covering rather than conviction-driven leveraged long positions. This distinction is crucial, 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.
While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion, Thielen warned that the rally's structure remains fragile. The market has shifted from an actively traded environment to one where participants are largely on the sidelines, characterized by 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 over the coming week.
Ethereum's market also paints a similar picture, with volumes dropping over 50% and derivatives positioning showing limited appetite for risk. However, the setup is not outright bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations on the downside. According to Thielen, the near-term risk/reward is asymmetric to the upside if a catalyst emerges, which may come from outside the crypto space, with macroeconomic developments being the key factor that could determine direction in the days ahead.