The recent bitcoin price increase to nearly $80,000 has raised concerns about the sustainability of the rally, with low trading volume and stagnant derivatives activity. 10x Research head Markus Thielen noted a discrepancy between the price movement and the underlying market participation in his weekly report.
'The data beneath the surface tells a cautious story, despite bitcoin's 4.7% increase over the past week,' he stated. Trading volumes have decreased significantly, with bitcoin's weekly volume 17% below average and ether's volume 20% below average. Funding rates, which measure leveraged positioning, remain extremely low. 'Funding rates dropped 6.8% to the 3rd percentile, and volumes plummeted 33% to the 4th percentile,' Thielen explained, adding that the price increase was driven by spot buying or short covering rather than leveraged long conviction.
This distinction is significant because spot buying, often linked to institutional demand, is generally more stable but less explosive than leveraged trades. It also deprives the market of the momentum typically seen in strong bull runs.
Institutional flows have been a bright spot, with bitcoin ETFs recording nine consecutive days of inflows, resulting in total April inflows of $2.5 billion. Bitcoin's dominance has also increased to 60%, indicating that capital is concentrating in the largest cryptocurrency rather than spreading across the market. However, Thielen warned that the rally's structure remains fragile. 'The market has shifted from an actively traded environment to one where participants are largely on the sidelines,' he wrote, describing a 'low-funding, low-volume regime that historically reflects hesitation rather than momentum.' Options markets support this view, with volatility falling into the lower quartile of its historical range and traders anticipating relatively modest price fluctuations over the coming week.
'The market is pricing in a relatively calm environment,' the report noted, even as sentiment gauges approach elevated levels. Ethereum presents a similar picture, albeit with even weaker participation. Volumes have decreased by more than 50%, and derivatives positioning reveals limited risk appetite. 'The volume implosion points to a market where conviction remains low, and participants are largely disengaged,' Thielen stated.
Despite these signals, the setup is not outright bearish. With limited leveraged long positions, the risk of forced liquidations on the downside is reduced.
'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen wrote. This catalyst may originate from outside the cryptocurrency space, with the report highlighting macroeconomic developments as the key factor that could determine direction in the days ahead. For now, the bitcoin rally appears intact, but without stronger participation, it may struggle to hold unless broader market conditions provide support.