Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volume and muted derivatives activity raising concerns about the rally's durability. In a weekly report, 10x Research head Markus Thielen highlighted a disconnect between the price action and underlying market participation.
'Bitcoin's 4.7% increase over the past week tells a cautious story beneath the surface,' he wrote. Trading volumes have dropped significantly, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 20%. Funding rates, which measure leveraged positioning, remain deeply negative.
'Funding rates fell 6.8% to the 3rd percentile, and volumes collapsed 33% to the 4th percentile,' Thielen said, adding that the move higher was driven by spot buying or short covering rather than leveraged long conviction. Institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows, helping push total April inflows to $2.5 billion. However, Thielen cautioned 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.
Options markets reinforce 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 paints a similar picture, with volumes dropping more than 50% and derivatives positioning showing 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.
'Near-term risk/reward is asymmetric to the upside if a catalyst emerges,' Thielen wrote. This catalyst may come from outside the crypto space, with macroeconomic developments potentially determining direction in the days ahead.