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 his weekly report, 10x Research head Markus Thielen highlighted a discrepancy between price movements and underlying market participation, noting that 'bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface.' 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, with Thielen stating that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This movement was driven by spot buying or short covering rather than conviction-driven leveraged long positions. 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 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 pricing in relatively modest price swings over the coming week. Ethereum's market also shows similar patterns, with volumes dropping over 50% and derivatives positioning indicating limited risk appetite.
Despite these signals, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced due to limited leveraged long positions. The emergence of a catalyst, potentially from outside the crypto space, could determine the direction of the market in the days ahead.