Bitcoin's recent climb towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the rally's sustainability. A weekly report by 10x Research head Markus Thielen highlights a disconnect between the price action and underlying market participation, with bitcoin's 4.7% rally over the past week accompanied by a cautious story beneath the surface.
Trading volumes have dropped sharply, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen noting that 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 and total April inflows reaching $2.5 billion. However, Thielen cautions 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. The setup is not outright bearish, but the risk of forced liquidations on the downside is reduced, and the near-term risk/reward is asymmetric to the upside if a catalyst emerges.
This catalyst may come from outside the crypto space, with macroeconomic developments potentially determining the direction in the days ahead.