Bitcoin's recent climb towards $80,000 is showing signs of weakness, with low trading volume and muted activity in the derivatives market raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation, stating that the 4.7% increase in bitcoin's price over the past week tells a cautious story beneath the surface. Trading volumes have dropped significantly, 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 the move higher was driven by spot buying or short covering rather than leveraged long conviction. This distinction is important, as spot buying tends to be steadier but less explosive than leveraged trades, leaving the market without the kind of momentum typically seen in strong bull runs. Institutional flows have been a bright spot, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion.
However, Thielen cautioned that the rally's structure remains fragile, with the market shifting from an actively traded environment to one where participants are largely on the sidelines. The options market reinforces 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. Ethereum's market also shows similar signs of weakness, with volumes dropping more than 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 key factor that could determine the direction of the market in the days ahead is macroeconomic developments, and for now, bitcoin's rally appears intact, but it may struggle to hold unless broader market conditions provide support.