Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and stagnant derivatives markets raising concerns about the rally's sustainability. 10x Research's head, Markus Thielen, noted a discrepancy between the price movement and the underlying market participation in his weekly report. 'Despite bitcoin's 4.7% gain over the past week, the data tells a more cautious story,' he stated.
Trading volumes have plummeted, 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 pointing out that 'funding rates fell 6.8% to the 3rd percentile, and volumes collapsed 33% to the 4th percentile.' This suggests that the price increase was driven by spot buying or short covering rather than confident leveraged long positions.
Institutional investment has been a positive factor, with bitcoin ETFs experiencing nine consecutive days of inflows, resulting in $2.5 billion in total April inflows. 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 to the lower quartile of its historical range and traders expecting relatively modest price fluctuations in the coming week. Ethereum's market is similarly weak, with volumes dropping over 50% and derivatives positioning showing limited risk appetite.
While the setup is not outright bearish, the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. 'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen noted, highlighting the potential for macroeconomic developments to influence the market's direction in the days ahead.