Bitcoin's recent push towards $80,000 has shown signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the rally's sustainability. Markus Thielen, head of 10x Research, noted that despite bitcoin's 4.7% gain over the past week, the underlying market data tells a more cautious story. Trading volumes for bitcoin and ether have dropped significantly, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%. Additionally, funding rates, which measure leveraged positioning, remain deeply negative, indicating that the move higher was driven by spot buying or short covering rather than conviction from leveraged long traders.
While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, the rally's structure remains fragile. Thielen warned that the market has shifted to a low-funding, low-volume regime, which historically reflects hesitation rather than momentum. The options market also reinforces this view, with volatility falling into the lower quartile of its historical range and traders pricing in relatively modest price swings.
Ethereum's market also shows similar signs of weakness, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. However, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced due to limited leveraged long positions.
The key factor that could determine the direction of the market in the days ahead is macroeconomic developments, and bitcoin's rally may struggle to hold unless broader market conditions provide support.