Bitcoin's recent push towards $80,000 is showing signs of weakness, with low trading volumes and subdued activity in the derivatives market raising concerns about the sustainability of the rally. In a recent report, 10x Research head Markus Thielen highlighted a disconnect between the price movement and the 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 plummeted, 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 stating that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile.' This suggests that the move higher was driven by spot buying or short covering rather than conviction from leveraged long traders.
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. 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. The market is pricing in a relatively calm environment, even as sentiment gauges approach elevated levels.
Ethereum's market is also characterized by weak participation, with volumes dropping over 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 if a catalyst emerges, the near-term risk/reward could be asymmetric to the upside.