The price of Bitcoin (BTC) rose 20% on January. 12, from $30,500 to around $36,600, across major exchanges. Merely while the rebound after the correction has been strong, at that place are two warning signs.

BTC/USDT 1-60 minutes toll chart (Binance). Source: TradingView.com

First, the funding charge per unit in the futures market remains high. The funding rate is a mechanism that incentivizes the minority of the market.

For example, if at that place are fewer short-sellers in the market, then buyers accept to pay short-sellers a fee every 8 hours. If the funding rate is high, information technology means buyers are paying sellers.

Second, the U.S. dollar strength alphabetize (DXY) is start to recover, which could be a bearish sign for Bitcoin and gold.

What comes side by side after the drop and the recovery of Bitcoin?

Co-ordinate to Julien Bittel, a multiasset fund director at Pictet Nugget Management, the U.S. dollar is "very oversold."

The dollar has continuously declined since the coronavirus pandemic began in early on 2020, struggling to compete against other reserve currencies, like the Japanese yen.

The uncertainty around the United States ballot and the stimulus further led to the underperformance of the DXY throughout 2020.

Bittel said that the dollar is now looking oversold and the dollar's momentum could strengthen in 2021. He wrote:

"The dollar is looking very oversold. I however think a stronger dollar will exist a key theme to watch out for in 2021. Speculators are dorsum to existence near record short DXY as a % of full OI. The electric current driblet in DXY looks very like to the one from 03/17-02/18. This analog would propose a base could be in place past late Q1 2021."

The positive outlook of the dollar poses a take a chance to Bitcoin'due south momentum considering alternative stores of value are priced against the dollar.

Hence, if the dollar begins to rally, both golden and Bitcoin could see a potential pullback, particularly subsequently a strong quarter.

Atop the rising dollar, the high funding rate of the Bitcoin futures marketplace is an issue in the short term.

A high futures funding charge per unit is not necessarily bad in itself, but if the price of Bitcoin declines while the funding charge per unit remains loftier, it could raise the probability of a correction.

The combination of the dollar's momentum and the overheated derivatives market make a pullback more than likely in the nearly term.

Lack of stablecoin arrival is another concern

Ki Young Ju, CEO of CryptoQuant, said that a "2d dumping" could occur, as was seen on Jan. eleven. He stated that miners are selling with no stablecoin inflows, which is a problematic trend.

Bitcoin Miners Position Index. Source: CryptoQuant

Stablecoin inflows typically correspond buyer demand from sidelined capital. If stablecoin deposits to exchanges increase, information technology indicates an overall bullish market place sentiment. Ki wrote:

"Naught has been changed since yesterday. Miners are selling, no pregnant #stablecoin inflows, no #Coinbase outflows, and 15k $BTC flowed into exchanges since yesterday. We might have second dumping."

In the foreseeable future, the ideal scenario for bullish traders would be to look for the funding rate to neutralize and stablecoin inflows to increase.