Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading activity and muted derivatives market performance raising concerns about the rally's sustainability. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and market participation.
'The data tells a cautious story beneath the surface,' he noted, as bitcoin's price increased by 4.7% over the past week. However, trading volumes have dropped 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 the move higher was driven by spot buying or short covering rather than leveraged long conviction. 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 flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, totaling $2.5 billion in April, and bitcoin dominance climbing 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 pricing in relatively modest price swings.
Ethereum's market also shows similar signs of weakness, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite. Despite these signals, the setup is not outright bearish, with the risk of forced liquidations reduced due to limited leveraged long positions.
The emergence of a catalyst from outside the crypto space, such as macroeconomic developments, could determine the direction of the market in the days ahead.