Interest rates remain unchanged, will encryption go sideways first? The Chaos Index teaches you to see through the "logic behind the sideways movement".

The Federal Reserve (FED) remains inactive, but the market actually "wants a rate cut."

On June 18, 2025, the Federal Reserve (FED) chose to keep interest rates unchanged at a target range of 4.25% to 4.5% during its policy meeting. Everything seems calm and in line with market expectations, but don't be fooled by appearances — after this meeting, the market's expectations for a rate cut in September soared to 71%!

What does it mean? The Federal Reserve (FED) does not say anything, but the market has already "imagined" a future easing scenario. Against this backdrop, the Federal Reserve (FED) has raised its inflation expectations (to 3%) while lowering its economic growth expectations (to 1.4%), on one hand saying there is no rush to cut interest rates, while on the other hand presenting a posture that "the economy may not be able to hold up."

Powell continued to use "vague language" at the press conference: inflation is still high, the economy is still uncertain, "we will closely monitor the data"—translated: they haven't figured it out either, and market sentiment has taken the lead.

BTC and ETH seem stable, but they are actually trapped in the "waiting zone".

Bitcoin has recently stabilized around $104,000, while Ethereum is also hovering around $2,550. From the data, BTC's 30-day volatility is only 1.9%, and ETH is just 3.17%, both in the historically low range.

In other words: prices are moving, while the market is waiting.

The market is entering a "stabilization period," and this stability is not because everyone is bullish or bearish, but because large funds are on the sidelines: whether to wait for the next move from The Federal Reserve (FED)? Or to wait for inflation data to continue to soften? Or to wait for some black swan event to materialize?

If you rashly chase after rising prices and sell during declines at this time, you may fall into a dilemma of "being caught in a bind"—so we need to clarify a key question:

Is the current market "brewing new trends"? Or has it already "laid flat and is oscillating"?

Understanding the market status is the first step in trading.

Why is it said that judging market conditions is so important? Because the scenarios for strategy usage are fundamentally different!

If you determine that the market has a trend, what you should do is follow the trend, such as opening positions in the direction of the trend using MACD and moving averages.

But if you judge that the market is volatile, then you should do the opposite, selling high and buying low, for example, performing mean reversion at the upper and lower bounds of the range.

The reality is that most of the time the market is in a state of ambiguity—when you use a trend strategy, it suddenly reverses; when you want to trade in a range, it directly breaks out.

So you need a "status scout" that doesn't predict direction, but tells you: which tactics you should use.

Chaos Index: Teach You How to Determine Whether "Stability" is Real or Fake Stability

At this time, the Choppiness Index has become our good helper. Its value ranges from 0 to 100, not telling you the direction of the rise or fall, but indicating whether the market is in a "trending" state or "choppy".

In simple terms:

If you see the Chaos Index above 61.8, it indicates that the market is "horizontal," suitable for range trading;

If it is below 38.2, it is highly likely that it has entered a "walk"* state, which is suitable for following trends;

In the middle region, we need to observe in conjunction with other signals.

To verify its reference value in the current market conditions, the author utilized the custom indicator feature of AiCoin to conduct real-time construction and display of the Chaos Index, overlaying it on the 1-hour candlestick chart for analysis.

In phase one, the Chaos Index is clearly approaching the high value range of 61.8, with the K-line showing a sideways consolidation, lacking a clear direction, and the market overall is in a typical state of fluctuation.

Entering phase two, the chaos value quickly retreats and oscillates around the low critical value of 32.8. At this time, we can clearly see the K-line breaking through the oscillation range, and the trend characteristics begin to emerge;

As we reach the current stage three, the chaos index has risen again, approaching the level of 60—this suggests that the market is likely back to a "sideways" movement. Isn't this what we previously felt was a "stability period"?

Of course, it is worth emphasizing that the Chaos Index itself does not provide buy or sell signals, nor does it tell you whether to go long or short. Its core function is to confirm the structural properties of the current market, thereby assisting us in choosing the appropriate tools and strategies.

If you need to customize your own market judgment indicators, you can download AiCoin to give it a try:

Market stability ≠ arbitrary actions, in the next article we will discuss how to take action.

So to summarize: the current market appears calm, but it is actually in a state of coexistence between macro uncertainty and technical compression. Whether it is stability with change or change within stability, the most important thing is not to blindly apply strategies, but to understand what kind of market structure you are facing.

This is exactly the significance of the Chaos Index - to help us break down the structure, clarify the direction, and lay a solid foundation for strategy selection.

As for what specific strategy to use? How should stop-loss be set reasonably?

——In our next article, we will discuss practical aspects related to the current market.