Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volume and muted activity in the derivatives market raising concerns about the rally's sustainability. In a recent report, 10x Research head Markus Thielen noted a disconnect 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 declined sharply, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, falling 6.8% to the 3rd percentile, while volumes 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 less explosive but steadier form of demand.
Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, totaling $2.5 billion in April, and bitcoin dominance increasing 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 into the lower quartile of its historical range and traders pricing in relatively modest price swings.
Ethereum's market also shows similar signs of weakness, 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, and the near-term risk/reward is asymmetric to the upside if a catalyst emerges.
Macro-economic developments are likely to be the key factor determining direction in the days ahead, and for now, bitcoin's rally appears intact, but without stronger participation, it may struggle to hold unless broader market conditions provide support.