Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and muted derivatives activity raising concerns about the rally's durability. A weekly report by 10x Research head Markus Thielen highlights a disconnect between the price action and underlying market participation, with bitcoin rallying 4.7% over the past week despite cautious underlying data. Trading volumes have dropped significantly, with bitcoin's weekly volume coming in 17% below average and ether's volume falling 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 leveraged long conviction.
This distinction is important, as spot buying tends to be steadier 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 bright spot, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion.
However, Thielen cautions 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's market also shows similar signs of weakness, 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. The key factor that could determine direction in the days ahead is macroeconomic developments, and for now, bitcoin's rally appears intact, but may struggle to hold unless broader market conditions provide support.