The recent surge of Bitcoin towards $80,000 is showing signs of weakness, with low trading volume and lackluster derivatives activity raising concerns about the rally's sustainability. In his weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation.
'Bitcoin saw a 4.7% increase over the past week, yet the data beneath the surface 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%. At the same time, funding rates, a measure of leveraged positioning, remain deeply negative. 'Funding rates dropped 6.8% to the 3rd percentile, and volumes collapsed 33% to the 4th percentile,' Thielen said, adding that the upward move 'was driven by spot buying or short covering rather than conviction from 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.
It also leaves 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, resulting in total April inflows of $2.5 billion. Bitcoin's dominance has also risen 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.' Options markets reinforce 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. 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.
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. That catalyst may come from outside the crypto space, with macroeconomic developments being 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.