The recent surge of Bitcoin towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted a discrepancy 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 plummeted, with Bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%.
Funding rates, a measure of 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 movement was driven by spot buying or short covering rather than leveraged long conviction, which tends to be less explosive and leaves the market without the momentum typically seen in strong bull runs. Institutional flows have been a positive aspect, with Bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion. 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.' 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.
The market is pricing in a relatively calm environment, even as sentiment gauges approach elevated levels. Ethereum presents a similar picture, with volumes dropping over 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.
The near-term risk/reward is asymmetric to the upside if a catalyst emerges, which may come from outside the crypto space, with macroeconomic developments being the key factor that could determine direction in the days ahead.