Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the rally's sustainability. In a recent report, 10x Research head Markus Thielen noted a disconnect between the price movement and the underlying market participation, stating that the 4.7% increase in bitcoin's price over the past week tells a cautious story. Trading volumes have dropped significantly, with bitcoin's weekly volume 17% below average and ether's volume down 20%. Funding rates, a measure of leveraged positioning, remain deeply negative, with Thielen noting that the move higher was driven by spot buying or short covering rather than conviction from leveraged long positions.
This distinction is important, as spot buying tends to be more stable but less explosive than leveraged trades, leaving the market without the kind of momentum typically seen in strong bull runs. Institutional flows have been a positive factor, 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 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 pricing in relatively modest price swings over the coming week.
Ethereum's market shows a similar picture, with volumes dropping over 50% and derivatives positioning indicating limited appetite for risk. Despite these signals, the setup is not outright bearish, with the risk of forced liquidations on the downside reduced due to limited leveraged long positions. The report highlights macroeconomic developments as the key factor that could determine the direction of the market in the days ahead, and for now, bitcoin's rally appears intact, but may struggle to hold unless broader market conditions provide support.