Bitcoin's recent push towards $80,000 has shown signs of weakness, with low trading activity and muted derivatives markets raising concerns about the rally's sustainability. In a recent report, Markus Thielen, head of 10x Research, highlighted a disconnect between bitcoin's price action and underlying market participation. Despite a 4.7% increase in bitcoin's value over the past week, the accompanying data tells a more cautious story. Trading volumes have dropped significantly, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%.
Funding rates, which measure leveraged positioning, remain deeply negative. According to Thielen, the move higher was driven by spot buying or short covering rather than leveraged long conviction. This distinction is important, as spot buying tends to be steadier but less explosive than leveraged trades, leaving the market without the kind of momentum typically seen in strong bull runs. Institutional flows have been a bright spot, with bitcoin ETFs recording nine consecutive days of inflows, helping push total April inflows to $2.5 billion.
However, Thielen cautioned that the rally's structure remains fragile, with the market shifting from an actively traded environment to one where participants are largely on the sidelines. 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. Ethereum's market also shows a similar picture, with volumes dropping more than 50% and derivatives positioning showing limited appetite for risk.
Despite these signals, the setup is not outright bearish, with the risk of forced liquidations on the downside reduced due to limited leveraged long positions. 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 the key factor that could determine direction in the days ahead.