Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives market engagement raising concerns about the rally's sustainability. In a recent report, 10x Research's head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation, stating that 'Bitcoin's 4.7% rally over the past week tells a cautious story beneath the surface.' Trading volumes have fallen significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%.
Funding rates, which measure leveraged positioning, remain deeply negative, indicating that the recent price increase was driven by spot buying or short covering rather than conviction from leveraged long traders. This distinction is crucial, as spot buying tends to be more stable but less explosive than leveraged trades, leaving the market without the momentum typically seen in strong bull runs. Institutional investment has been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, resulting in total April inflows of $2.5 billion, and bitcoin's dominance increasing 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 a similar picture, with even weaker participation, as volumes have dropped over 50% and derivatives positioning indicates limited risk appetite. Despite these signals, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations on the downside. Thielen noted that 'near-term risk/reward is asymmetric to the upside if a catalyst emerges,' which may come from outside the crypto space, with macroeconomic developments potentially determining the direction in the days ahead.