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 rally's sustainability. In a recent report, 10x Research head Markus Thielen highlighted the disconnect between the price action and the underlying market participation, noting that bitcoin's 4.7% gain over the past week was accompanied by a cautious story beneath the surface. Trading volumes have plummeted, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%.
Furthermore, funding rates, which measure leveraged positioning, remain deeply negative, with Thielen stating that the move higher was driven by spot buying or short covering rather than leveraged long conviction. This distinction is crucial, as spot buying tends to be more stable but less explosive than leveraged trades, leaving the market without the kind of momentum typically seen in strong bull runs.
While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, 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. The 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 paints 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. However, the rally's sustainability may depend on broader market conditions providing support, with macroeconomic developments being a key factor that could determine direction in the days ahead.