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 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, stating that 'bitcoin rallied 4.7% over the past week, yet the accompanying data tells a cautious story beneath the surface'.
Trading volumes have decreased 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 Thielen noting that 'funding rates fell 6.8% to the 3rd percentile and volumes collapsed 33% to the 4th percentile'. This suggests that the recent price increase was driven by spot buying or short covering rather than leveraged long conviction. While institutional flows have been a positive factor, with bitcoin ETFs recording nine consecutive days of inflows and total April inflows reaching $2.5 billion, Thielen warned that the rally's structure remains fragile.
The market has shifted from an actively traded environment to one where participants are largely on the sidelines, with a 'low-funding, low-volume regime that historically reflects hesitation rather than momentum'. Options markets also 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 is showing a similar picture, with even weaker participation and a 'volume implosion' that points to a market with low conviction and disengaged participants. However, the setup is not outright bearish, and the risk of forced liquidations on the downside is reduced due to limited leveraged long positions.
The report concludes that 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.