The recent climb of Bitcoin towards $80,000 is showing signs of weakness, with low trading volumes and muted activity in the derivatives market raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted the disconnect between the price movement and the underlying market participation. Despite a 4.7% increase in Bitcoin's price over the past week, the accompanying data tells a more cautious story. 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 a 6.8% drop to the 3rd percentile. Thielen noted that the move higher 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 factor, with Bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $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. Ethereum's market also shows a similar picture, with volumes dropping more than 50% and derivatives positioning indicating limited appetite for risk.
While the setup is not outright bearish, the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. The 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 that could determine the direction of the market in the days ahead.