Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation, noting that 'bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface'. Trading volumes have decreased significantly, 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 stating that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile'. This suggests that the move higher was driven by spot buying or short covering rather than leveraged long conviction. 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 a similar picture, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. Despite these signs, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations. 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 of the market in the coming days.