Bitcoin's recent push 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 a recent report, 10x Research head Markus Thielen highlighted a discrepancy between the price movement and the underlying market participation, stating that the 4.7% increase in bitcoin's value over the past week tells a more 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, with Thielen noting that the increase was driven by spot buying or short covering rather than conviction from leveraged long positions.
This distinction is significant, 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. 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 over the coming week.
Ethereum's market also shows similar weaknesses, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. Despite these signals, the setup is not outright bearish, with the risk of forced liquidations on the downside reduced due to limited leveraged long positions.
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 a key factor in determining direction in the days ahead.