The recent surge of Bitcoin towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the rally's durability. In his weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price action and market participation, stating that 'Bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' Trading volumes have dropped significantly, with Bitcoin's weekly volume 17% below average and ether's volume falling 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen noting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This indicates that the price increase was driven by spot buying or short covering rather than leveraged long conviction, which is a less explosive but steadier form of demand.
Institutional flows have been a positive aspect, with Bitcoin ETFs recording nine consecutive days of inflows, resulting in total April inflows of $2.5 billion. 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 markets reinforce this view, with volatility falling into the lower quartile of its historical range and traders pricing in relatively modest price swings.
Despite this, the setup is not entirely bearish, as the limited leveraged long positions reduce the risk of forced liquidations on the downside. The emergence of a catalyst, potentially from outside the crypto space, could determine the direction of the market in the coming days.