The recent surge in bitcoin's price, nearing $80,000, is showing signs of weakness due to 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 highlighted the discrepancy between the price movement and the underlying 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 declined sharply, with bitcoin's weekly volume 17% below average and ether's volume down 20%.
Additionally, 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." The increase in price was driven by spot buying or short covering rather than leveraged long conviction, which is a less explosive but more stable form of market participation. Institutional investment has been a positive factor, with bitcoin ETFs experiencing nine consecutive days of inflows, resulting in total April inflows of $2.5 billion, and bitcoin dominance increasing 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 expecting relatively modest price fluctuations in the coming week. Ethereum's market also shows a similar picture, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite.
Despite these signals, the setup is not entirely bearish, as the limited number of leveraged long positions reduces the risk of forced liquidations on the downside. 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 a key factor in determining the direction of the market in the days ahead.