Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volume and muted activity in the derivatives market raising concerns about the sustainability of the rally. 10x Research's head, Markus Thielen, noted a disconnect between the price movement and the underlying market participation in a recent report.
Despite a 4.7% increase in bitcoin's price over the past week, the accompanying data tells a more cautious story. Trading volumes have dropped significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%.
Funding rates, which measure leveraged positioning, remain deeply negative. Thielen stated that the move higher was driven by spot buying or short covering rather than conviction from leveraged long positions. This distinction is important, 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, resulting in total April inflows of $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 over the coming week. Ethereum's market also shows a similar picture, with even weaker participation. 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 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 that could determine direction in the days ahead.