. Well folks, i hope you are having a fantastic day wherever you are and in today's video. I want to spend some time to break down a lot of the unnecessary fun in cryptocurrency markets. There'S a big misconception that i've seen over the last year, or so in crypto as there's, been some correlations between certain markets or certain indexes that leave people to believe that it's, the ultimatum for bitcoin or other asset classes to perform a certain way. And i want to go ahead and kind of dispel this misconception throughout the video, so we've got lots of things to discuss as we go throughout the video let's just go ahead and jump straight into it. So taking a look here over the last 24 hours here we can see cryptocurrency markets and relatively negative territory more than anything uh, not to any severe degree. Most coins are down following bitcoin around two to three percent, so slightly into negative territory, but i want to go ahead and mainly just start on this article here that i think really contextualizes the point that i want to hit on there's an article here from bitcoinus.com Saying more pain for bitcoin ahead as price breaks, the legacy trend line says analyst okay, so this is one of those articles where they they might take a piece from someone like myself or some other content creator in the crypto space or some kind of trader on Trading view, where again this isn't uh again, analysts can be a very broad term right.
It'S not like you know, it's a big institutional investor on wall street, so this was a chart that they put out here that i you know i always love seeing other people's perspectives on things, because i think this is interesting so on the chart here they showcased The inverse correlation between the dixie in this case, which is the dollar weighted index in this case, that measures the dollar's performance against other world currencies such as the japanese, yen, uh, the british pound, the euro. You know the chinese yuan, you name it measures against a whole range of different currencies across the board. So, generally speaking when the dixie goes down, we've seen that bitcoin goes up right and just to be clear when the dixie's going down the dxy. In this case, the dollar is performing worse against other currencies and, in this case we've we've tended to see that bitcoin rises at least back here since march, while the dixie's been going down but there's a there's. A few things i want to point out here now, not only on the sense of ta here, do we see that the trend line is showcasing that oh we're at a really bad point here, where supposedly bitcoin is now making uh this line of previous support here? That set at a support level here and was broken here, is now starting to act as resistance and we're starting to see with this trend line here that the dixie in this case, if we take a look at the chart, is now starting to make its previous Line of resistance support now there's, not a lot of small tweaks here that i want to talk about here now.
I honestly make mistakes as any trader does, but i do want to say something very clearly here and that is that for their dixie line of resistance. Here, right here from the absolute peak here down to here, this really isn't being made into support the line's a little too inward, if you're, actually taking into account the wixes here in this case, there's, really not a consistent break in the line of resistance or really A line of you know resistance here, in this case right it's still at play here right, i would say in that case, but small things like that and ta are really not my favorite thing. That'S, not my point here. I want to talk about right. I can respect you know some different ways about drawing trend lines. What i want to talk about here is a much better way to naked trade or utilize support and resistance, and that is just simply focusing on the significant price levels. So one thing that we did recently on my channel that i talked about a lot is: i talk a lot about the treasury yields and how we're going towards negative yields on treasuries in the united states. Much like other government bonds across the world it's a signal that the federal reserve is going to be staying zero percent or is going to most likely be exploring negative interest rates going into the later part of 2021. Now the important thing to focus on here is not always just you know, support and resistance lines.
As we talked about, they can be very subjective here right. You can start to draw trend lines. However, you want, you could be looking at the logarithmic chart. One of the things that i always look for here, that's very very important, is to focus in on the significant highs and lows, and specifically, when we've been on a downtrend, i like to focus on the significant lower highs. Okay, because when we can focus on that, we can see very clearly. Ah, the market has made it very, very obviously clear that any significant time that we've rebounded we've set in lower highs and then what you start to see is, after we have multiple lower highs. At relatively similar price levels that signal buyers are not passing through the previous price right again, this is an index, but this is generally showing that people are paying less for dollars against other currencies time and time again, then we can see here in this case that We start to go down through significant downward turns and once we rebound and have a significant, lower high. In fact, this is more of like a double top here right then we start to go lower now. What we've got here is what many people think is a dixie rebound and again, in this case, we're still setting in a relative lower high. Here we have not broken past the highs here in september, which are still far below where they were in july and until we start to see a higher low and a higher high in that case i'm, not very interested.
But even this right. Even this point here, guys i'm not trying to be biased. I'M. Just sharing with you the things that i look for for reversals. I don't just look at trend lines and the same would go here for bitcoin right about people getting excited about bitcoin. If you actually want to take a look back at bitcoin on this principle, here, people only started to massively buy bitcoin when it broke above its previous resistance and set in a new all time high or excuse me a higher a higher high. In this case, my apologies for the speaking there. In that case, you can see here that bitcoin pushed sideways until finally, it broke above this point of resistance here back in november. This was the last relative high and then months following we set in lower highs here or around the same range and then bam. We said it, and that was the trend reversal right, no trend lines, no like very basic level, uh kind of analysis here again – or i would say no complex analysis really needed here – we're, just simply focusing on when we set that higher high end and also maintain Higher lows now, even this guys all these principles that i just shared with, you are not my central point here. I know i'm, like probably dragging you guys on in this case, and i apologize for that. Sometimes it takes some time to share your thesis on things or your kind of perspective.
My point here that i really want to drill home – and i mentioned it – i kind of hinted to it at the beginning of the video – is that as much as there has been a significant correlation, i'd say more than anything with the dixie or the dxy. The dollar index, with the uh, the performance of bitcoin and an inverse correlation right, an inverse sense of performance right bitcoin does well here where the dixie goes down, just because the dixie might be having a trend reversal here as much as it is definitely something we Want to consider it is not an ultimatum for bitcoin as an asset. This correlation has just started to really formulate, or has just so happened to have happened during this time since march. There is no absolute direct correlation with the dixie or the dollar's general performance against bitcoin and the longer term perspective or the last 10 years the dixie going up or down like it did. For example, dixie went uh here from january 2018 here to march right. No direct correlation with bitcoin take a look back here from 2014 to 2016 right bitcoin did phenomenally well during this time it broke past its all time highs and rallied into 2017 doing phenomenally. Well it going from 80 to 100 shouldn't happen. We shouldn't see the dixie going up that much so again. What i don't like is as much as, for example, bitcoin is going to hold much more relevancy against the dollar over the next few years, and the dixie is going to be a very valuable indicator or index in a sense that we want to watch it's.
Not an ultimatum here, bitcoin has done phenomenally well in the long term sense. If we take a look here, i just want to make sure we're looking at coinbase uh. If you look at, for example, i'll pull up blx here, then i'll i'll come back and let me just make sure i've got my chart saved. If we go here to blx brave new coin liquid index to gear to log chart right, bitcoin is done phenomenally. Well, you don't need to tell you this it's set in higher significant lows again that's the important point here and higher significant highs with each cycle with each cycle that has not been tested yet has not been challenged. Bitcoin has continued to clobber through and way outperform how the dollar is performing against other currencies for that matter, but i digress here. What i want to focus in on is, i want to go ahead. Take a look at some of the short term price action and talk about what really matters here. What price is telling us? So what it is telling us here is something quite interesting if we take a look at the chart here again, we're we're, pulling back here in price for bitcoin we've had a down day of about 1.68 and along with that as well for ethereum we've. Had the same thing here, we've had about a 3.34 pullback, but what's really going on here is naked trading it's price levels here, it's resistance and support, so we've had higher lows here, right and we've been able to set at higher highs now, it's time to solidify That, before we really kick off in the rally and what investors are looking to see is, if we'll be able to hold the same level, we did last time right before we eventually collapsed through.
So the question here is whether or not we're going to be holding it this time around right. If we can challenge through this level here and eventually get a breakout on this more relevant short term line of support. This is on ethereum here. The same goes here for bitcoin bitcoin has been setting in these higher lows finally set in a higher relative high compared to the last one back in september and now we're going to see if we can make that support. What was previously resistance set in a new high set, a new high for the higher low in this case and then start to break out and start to challenge towards some really significant price levels breaking above the all time highs, eventually sometime in 2021. Again, this is just a rough estimate here, it's, a rough estimate, it's not meant to be a factor, you know kind of proof of where price is going, the more we move away, the less relevant this line becomes. This is more speaking to what i want to talk about now, there's. One last thing i want to give is a bonus discussion and, of course, it's a very controversial one, and that is everyone's pain, point or fear point about the election coming up in regards to affecting bitcoin's price. Okay. So again, i know this is a very controversial topic, as as it always is politics, especially in the united states, is not something people like to talk about, but i'm, not even here to talk about politics.
I want to go ahead and talk about this general talking point. This fear point the fun point that the election is going to be either great or it's, going to be turmoil for bitcoin, okay, so, basically leading to existential volatility. This is again another point that gets mentioned within the article. If i go back here talked about the fundamentals agree here that rising stock market volatility to heavy election, you know, with the correlation of bitcoin to the stock market, is going to lead bitcoin to go down. Okay, now i would say that the point here that maybe the correlation or the general uh negative uh reality of assets could weigh down on bitcoin. I would agree with that, if equities were to drop significantly we've seen that in overall markets, when when capital is going back to dollars for safety right, i get it that's. What some people are going to argue here, but i got ta tell you guys. I i really stand in the the confident belief here that the election is not going to affect stocks that much no matter what side comes in. I really don't see that being a a cause for concern for equities, because what's been driving this rally and what we've learned very clearly, whether or not there are going to be a revoking of the tax cuts or is there or, if there's going to be some Form of healthcare policy or some kind of policy proposed from one of the two candidates we've learned that central banks are going to do everything in their power they've been doing it for more than a decade to keep these markets up.
We know through the treasury yields through the cme markets, that negative yields are coming very very soon and now it's just a matter of time, so keeping this in mind right that they're going to enact these kind of policies. So again we realized here that that's not what drives equities so sorry, i was getting a phone call, guys anyways. I want to go ahead here and talk about something very, very important to just kind of showcase in the sense of history here, how elections play a role or don't play a role here. Can you tell me what day here right on this chart you're not looking at the dates down below don't cheat what day during this chart here? This is back in roughly around 2016 towards the election season, which one of these days was where the actual election happened. Can any of you maybe recall that do any of you remember? Maybe some of you were trading crypto markets like myself around that i was watching crypto at the time. That day was between these two candles right here. This is november 8th. The election went into the late night when the election finally came through and trump had won. Price of bitcoin shot up a little bit closed off at around 1.7 percent for the day at its peak. A little bit around, probably like three percent, might sound like a lot. But you want to know what other days where we have that same kind of price action and by bare mind we're doing two days, which is actually kind of cheating in a sense uh.
To try to build the narrative that there is volatility. Well, we had a four percent day here. We had a 7.65 day here we had a two five percent day here. We had a three point: six, eight percent day here we had a three point: five percent day here, a four percent day of three point: seven, six, three point: seven: three percent day, uh back here, we had a negative two point: four seven percent day with increased Volatility include the wicks and, along with that, as well four percent deck folks. I i i can't stress that enough as much as equity markets have ballooned um. I think what you have more of a fear of is the central banks of the world, deciding that they're going to somehow pull back monetary policy, which i think we know very clearly isn't, going to happen anytime soon. So again, my whole point here is: i don't want you guys being fearful of our unnecessary things. I know i rambled today uh, but i wanted to try to talk about a lot of things that i know has been on the mind things that have been on the minds of people across the crypto space and across the financial world as they're looking at bitcoin. As an asset, you know here's what i'll say here: markets are determined by inflows and outflows. If there are significant inflows into a market, the price of the asset is going to go up it doesn't matter.
If it's, rational or not, people are paying a price for something more money coming in, they can be paying likely a higher price. The point that i want you to take away here is that when you see square or micro strategy buying, you know 50 million or 400 million dollars a bitcoin respectively. You have to ask yourself something they're doing that into this time period, where everyone's so fearful. Here, oh bitcoin, oh the election and ah the correlation with the dixie. Do you think that that's really going to impact their positions? I don't think so. I don't think that it's impacting if anything people are taking that long position going into this fearful time period, where we're uncertain about who's going to be president or we're uncertain about the future of the united states, we're a very divided country. Right now, i wouldn't disagree with that, or at least in the political sense right. All these things are happening and it seems like more and more companies are buying bitcoin, interestingly enough, again, i'm really trying to see it. The other way guys i don't like to be biased here i i don't have an allegiance to crypto markets. Sure i've got a channel that's mainly focused on crypto, but i can go trade equity markets. I can go trade any market. I want i'm not regulated to this space right and i can tell you guys: i'm, not really positioned much in equities i'm, not positioned much in cash, because the monetary policy doesn't reward me for doing so plain and simple, no matter, no matter how much volatility there Is in crypto markets or equity markets, so anyways guys.
I hope you all enjoyed this video.