Institutional funds are flooding in, and BTC/ETH are stagnant like a mountain. Is this the main force accumulating strength? Or is it because good news has been fully priced in? The chaos index has already given the answer: this is not a trend, it is oscillation. So how should we act?
Good news keeps coming, but the market is 'steady as a rock'?
Let's first take a look at today's hot news:
BTC ETF net inflow of 2,761 BTC in a single day.
ETH ETF net inflow of 2,413 ETH.
Main force transaction volume exceeds $200 million.
Semler Scientific plans to hold over 100,000 BTC.
No matter how you look at it, the market is 'blowing warm winds': whether it's ETF funds entering or listed companies allocating BTC, the overall logic points to one keyword—bullish expectations.
But the feedback from the price is as follows: BTC is still oscillating around $104,600, ETH is consolidating around $2,520, and the chaos index remains above 60, clearly indicating a high-level oscillation range.
Friends familiar with our previous article will know that a rising chaos index indicates the market is operating within an oscillation range, meaning: good news does not equal an upward surge; the current market is still in a 'power accumulation and consolidation' phase. In other words, the market is not unwilling to rise, but 'everyone is waiting': waiting for the Fed to make a statement? Waiting for data confirmation? Waiting for the Bitcoin ETF to show an explosive curve?
But waiting is waiting; the necessary short-term rhythm is still present—this is also the key point we want to discuss today.
If you don't understand the chaos index, you can take a look at this article: (Interest rates not falling, crypto stagnating? The chaos index teaches you to see through the 'logic behind the consolidation').
The seemingly 'boring' consolidation phase is actually a battlefield for 'smart money'.
The characteristic of the oscillation period is: unclear direction, but not low volatility. Don't be deceived by the visual effect of 'moving sideways'; in fact, small fluctuations during the day are still sufficient for 'price differences'. Let's analyze the recent state of BTC/ETH 1-hour K-line.
Price behavior characteristics:
Significantly crossing the midline but quickly retracting, appearing as 'spike and drop' or 'dip and rise' repeatedly.
Strictly limited to operate within the upper/lower track range.
Combined with the analysis of large orders, this actually represents that institutions are not in a hurry to raise prices, but there are defenders at the bottom and pressure at the top, resulting in a 'balance' between bulls and bears.
This phase is actually the best window for neutral strategies to perform, such as 'Bollinger Bands', 'Keltner Channels', and other mean-reversion strategies.
How to implement the strategy? Use the chaos index to identify phases and execute with mean strategies.
Let's set up a simple strategy framework, with the logic as follows:
Screening phase: first use the chaos index to determine whether the market is 'oscillating', set a filtering threshold: when the CI (Chaos Index) is above 55, only then open the strategy, to avoid being 'slapped back and forth' during trend explosions.
Entry conditions: after entering the oscillation phase, we lay in ambush at the 'upper track' and 'lower track' of the Bollinger Bands. If the price touches the upper track, consider going short; if the price hits the lower track, consider going long.
Exit conditions: close the position when the price returns to the midline, capturing a 'middle price difference'; if the midline is not touched, exit with a 2% profit; or if the price goes the other way, stop loss at 1.2% loss. Another 'insurance line': once the chaos index falls below 55, indicating that the market structure has changed, exit regardless of profit or loss.
With this set of combinations, we do not seek explosive profits, but rather clear logic and controllable risks, which is very suitable for 'picking up scraps' in a fluctuating market. In simple terms: 'once we see the market is in a consolidation, we guard the edges of the range; if the price breaks through, we enter, and if it comes back, we exit.'
To visually verify whether this strategy is 'reliable', I also utilized AiCoin's custom indicator feature to directly display trading signals on the K-line charts of BTC and ETH.
What was the result? To be honest, surprisingly 'clean'!
When the chaos index is above 50 and the market is clearly in an oscillation structure, the signals are indeed very accurate: go long when you should, and reverse when you should. What's even better is that after entering a trend segment, the strategy automatically 'goes quiet' and gives no signals at all.
This leads us to start envisioning a more complete model logic: if we can first use the chaos index to distinguish between oscillation segments and trend segments, and then apply different trading strategies accordingly—wouldn't that allow us to 'capture every segment of the market' and calmly respond to an uncertain market?
Of course, the oscillation strategy presented today is just a relatively basic model; I haven't run a complete backtest or made live adjustments, just for reference. If you're also interested, you might as well try it yourself—download AiCoin (https://www.aicoin.com/zh-Hans/features), replicate this strategy model, and adjust the parameters according to your trading rhythm flexibly.
Summary
Don't be fooled by the 'calm surface' of the market. Real market movements are never initiated by passion, but by structural construction. Today, we used the chaos index and mean strategy to manage the operations in the oscillation segment, making the consolidation no longer a 'waiting period', but a 'steady earning period'. Of course, the market will eventually move. When the chaos index falls from a high level and the market re-enters a trend phase, we should switch to another set of strategies.
If there is a chance later, perhaps we can talk about how to determine when a trend segment has arrived? Which set of strategies should be used to capture the entire trend segment?
