The recent push of Bitcoin towards $80,000 is exhibiting signs of weakness, with low trading activity and subdued derivatives market action raising concerns about the sustainability of the rally. In his weekly report, Markus Thielen, head of 10x Research, highlighted a disconnect between the price movement and the underlying market participation. "Despite Bitcoin's 4.7% gain over the past week, the accompanying data paints a cautious picture," he noted. Trading volumes have declined sharply, with Bitcoin's weekly volume 17% below average and ether's volume falling 20%.
At the same time, funding rates, which measure leveraged positioning, remain deeply negative. According to Thielen, "Funding rates dropped 6.8% to the 3rd percentile, and volumes plummeted 33% to the 4th percentile," adding that the upward move "was driven by spot buying or short covering rather than conviction-driven leveraged long positions." This distinction is crucial, as spot buying, often linked to institutional demand, 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 aspect, with Bitcoin ETFs recording nine consecutive days of inflows, resulting in total April inflows of $2.5 billion. Bitcoin's dominance has also increased to 60%, indicating that capital is concentrating in the largest cryptocurrency rather than spreading across the market.
However, 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," he wrote, describing 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.
"The market is pricing in a relatively calm environment," the report noted, even as sentiment gauges approach elevated levels. Ethereum presents a similar picture, though with even weaker participation, as volumes have dropped more than 50% and derivatives positioning shows limited appetite for risk. "The volume implosion points to a market where conviction remains low, and participants are largely disengaged," Thielen said. Despite these signals, the setup is not outright bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations on the downside.
"Near-term risk/reward is asymmetric to the upside if a catalyst emerges," Thielen wrote. This catalyst may come from outside the crypto space, with the report highlighting macroeconomic developments as the key factor that could determine direction in the days ahead. For now, bitcoin's rally appears intact, but without stronger participation, it may struggle to hold unless broader market conditions provide support.