Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and subdued derivatives market action raising concerns about the sustainability of the rally. In his weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation, stating 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, which measure leveraged positioning, remain deeply negative, with Thielen noting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests that the recent price increase was driven by spot buying or short covering rather than leveraged long conviction. Institutional investment has been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, totaling $2.5 billion in April, and bitcoin dominance rising 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 expecting relatively modest price swings in the coming week. Ethereum's market also shows weak participation, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite.
While the setup is not outright bearish, with leveraged long positions limited, 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 being the key factor that could determine direction in the days ahead.