Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives market action raising concerns about the rally's sustainability. In his weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the underlying market participation, noting that 'Bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' Trading volumes have declined significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Funding rates, which measure leveraged positioning, remain deeply negative, with Thielen stating that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests that the recent price increase was driven by spot buying or short covering rather than leveraged long positions. Institutional investment has been a positive factor, 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 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 expecting relatively modest price swings in the coming week.
Ethereum's market is also characterized by weak participation, with volumes dropping over 50% and derivatives positioning showing limited appetite for risk. While the setup is not outright bearish, the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. 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 being the key factor that could determine the market's direction in the days ahead.