Written by Digital Asset Research
Translation: Shan Ouba, Golden Finance
"What is the difference between a hero and a coward? There is no difference. They both feel the same fear inside. What a hero does makes him a hero." - Cus D'Amato
The above is a quote from the late great boxing trainer Cus D’Amato, who is famous for training Mike Tyson. Cus was known as the Master of Fear. He taught his boxers to be best friends with fear and to make them understand that it is a normal and healthy part of life. If we didn’t have any fear, we would die. Everyone feels fear, but the difference lies in how we deal with it.
I have always believed that the psychology required to be a high-level fighter is pretty much the same as the psychology required to be a high-level trader. Everyone knows the old Wall Street saying: "Buy when the blood is flowing." But what they don't tell you is that it is actually very difficult to do this, even if you are an elite investor. They would have you think that professionals have no emotions and can trade at any time. The truth is, as Cus said, they feel the same fear as the rest of the market participants, but it is what they do that matters.
There are a lot of fears running rampant in the markets these days. Whether it’s World War III, riots, elections, an impending recession, or something else, tensions are certainly feeling high. All of these external factors make up a lot of scenarios we might worry about. However, we have to remember that it’s true that 90% of the things we worry about will never come true.
Remember the threat of World War III in 2022? Or the banking crisis trough in March 2023? How about the talk of a recession that continued through all of 2023 and much of 2024? How about the Israel-Hamas conflict that led to the trough in October 2023? Or the threat of an Iranian attack on Israel on April 13 and 14?
I’m not saying there aren’t problems in the world, but as far as I know, the market hasn’t crashed in response to any so-called “end of the world” event. In fact, all of these events have caused mini-panics, which gives us a buying opportunity.
Fear and Greed
For a market that has just come off all-time highs, there is overwhelming panic in the market. Whether it is the stock market or the cryptocurrency market, its index readings are close to extreme panic.
I can't count how many posts I've seen about market statistics that have historically signaled great buying opportunities. Take a look at the images below, just a few of which I shared.
Is this the worst day since the pandemic crash? Is volatility at its highest level since the regional banking crisis of 2023? The most turbulent earnings season since 2008?
To me, this sounds like total panic, but if we look at the chart and the cycles, we see that the current price is just below the all-time high. This doesn't seem to make sense.
At times like these, everyone is scared, but we have our work backing us up then. When those emotions weren't there, all the analysis we did told us to look for a significant August low. Now that we're here and everyone is panicking, we're not going to throw all that out the window. This is the foundation that allows us to see the facts when others are panicking.
I have been looking back and forth at the cycles to try to figure out where we could be wrong or where we are going wrong but I can't seem to make the case for a full blown crash here. Let's look at the chart to see what I mean.
stock
I'm going to try to keep this relatively simple. If it ain't broke, don't fix it. That's what our 60-year cycle is telling us. It's been running well all year, and we're going to continue to track it.
August 5th, today, is the day 60 years ago that the market made a new low after a 50% retracement. I have been saying since the 17th that this correction has more room to go down. Even after a historic 6% or 7% gain, I wrote to premium subscribers and told them that this market would make a new low. On Friday, the market did make a new low.
However, we are now at the stage where time is running out for panic. Here is the plan I laid out in last week’s market outlook and how it actually played out.
This is a very typical correction window for the stock market in an election year. That said, there could be a rally in September and further declines in October. But we'll talk about that then. At this point, I at least expect the stock market to start to bottom. It may not fully cooperate until later this month, so don't go all long, but what I mean is to start looking for our typical bottom signals. Reversal candles, bullish RSI reversals, 3-day reversals, etc. Let the market tell us that a bottom has been formed.
This is the weekly view since the same period last year. This is the third three-week correction that has taken us down 6%. As you can see, what I'm saying is, it remains to be seen how strong the rebound is from here. That will determine if this is the low or if we go through a longer correction in October like we did a year ago.
Finally, the date I want to focus on here is August 8, which is the Gann natural date. Then August 16, which is 120 degrees from the lowest point in April, the lowest point of the year.
Bitcoin
Bitcoin is going all out to try and catch everyone offside. Fortunately, we have been eyeing this moment as a buying opportunity since early May. I have had plans in place for weeks.
As I said, when things start to get messy, we have to stick to the plans we made and not let any emotions get in the way. While this is a very hard move, I’m going to tell you why I believe this will mark a major cycle low for BTC.
These daily time dates by degree have always been strong indicators of trend changes and when we have so many time dates grouped together it can be a strong signal. When you pair this with the higher time frames we listed in previous reports you get a significant change in trend. In this case we have the 90 week and 20 month windows combined with our daily time frame analysis.
The dates to watch this week are specifically around the 6th to the 9th. Remember, the Gann Natural Date is also in there, August 8th.
in conclusion
These environments are not easy, but the best have learned how to thrive in this fear. We have called every major low in this market so far, and I believe time and our analysis will prove correct once again. Remember, we have been planning for these lows for over 3 months, and now is the time to step up and execute. I am not telling you to be a hero and do something extremely risky, I am telling you to ignore the 95% of participants who are always on the wrong side of a trade.
As for the specifics, I think even with a low this week, it will be hard for stocks to find their footing in the coming weeks. The same is true for crypto. I expect the likelihood of a major low to be confirmed in the coming days, but markets usually take some time to sort out after such a big drop. Then we will have strong seasonality coming into October. I believe that in 3 months we will look back at these prices in crypto and think it was an absolute steal. Moments like these can make or break your entire year, so learn to let fear be your best friend.
