Bitcoin's recent push towards $80,000 is showing signs of vulnerability, with low trading activity and muted derivatives market performance raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted the disparity 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 significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%.
Additionally, funding rates, which measure leveraged positioning, remain deeply negative, with Thielen noting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests that the move upwards was driven by spot buying or short covering rather than conviction-driven leveraged trades. Institutional demand has been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion.
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 weak participation, with volumes dropping over 50% and limited appetite for risk. Despite these signals, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced due to limited leveraged long positions.
Thielen noted that 'near-term risk/reward is asymmetric to the upside if a catalyst emerges,' which may come from outside the crypto space, with macroeconomic developments potentially determining the direction in the days ahead.