The recent surge in bitcoin's price towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. In his weekly report, 10x Research head Markus Thielen noted a disconnect between the price movement and the underlying market participation. 'The data beneath the surface tells a cautious story,' he wrote, pointing to a 17% drop in bitcoin's weekly trading volume and a 20% decline in ether's volume. Funding rates, a measure of leveraged positioning, have also fallen to the 3rd percentile.
Thielen attributed the price increase to spot buying or short covering rather than conviction-driven leveraged trades. While institutional flows have been a positive factor, with nine consecutive days of inflows into bitcoin ETFs, the rally's structure remains fragile. The market has shifted to a low-funding, low-volume regime, historically indicative of 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.
Thielen cautioned that the setup is not outright bearish, but the risk of a downturn is reduced due to limited leveraged long positions. The emergence of a catalyst, potentially from outside the crypto space, could determine the direction of the market in the days ahead. For now, the bitcoin rally remains intact, but it may struggle to hold unless broader market conditions provide support.