Ethereum: What Our Signals Do

Ethereum drops harder than Bitcoin. In Q2 2022, BTC fell 56.8% — painful by any standard. ETH fell 69%. That extra 12 percentage points is where our signal earned its keep: +29.25% alpha in a single quarter, from a systematic exit that fired before the worst of the drawdown. Not a trading edge in ordinary markets — a structured way to step aside when the floor drops out.

Most quarters, you'd have been better off holding. ETH runs hard in both directions, and trend-following spends half its time on the wrong side of a rally. We accept that because holding through a 69% crash with no plan is worse than giving up a few points in the good times.

What the Backtest Showed

We ran MACD(12,26,9) + ADX(14)>25 on five years of daily ETH data across 20 quarters. Mean quarterly alpha: -0.54%. We beat buy-and-hold in 55% of quarters — 11 out of 20.

That -0.54% barely registers. You're matching buy-and-hold while spending only 51% of the time in the market. The other 49%? Cash. No overnight exposure, no watching a -40% candle form while you sleep.

Roughly 11 signals per year. Fewer than BTC's 18 — ETH's trends are longer, so crossovers fire less often.

Why ADX Greater Than 25

ETH is the only asset in our system that needs a higher ADX threshold than the standard 20. We expected ADX>20 to work like it does for BTC and ADA. The data said otherwise.

ETH trends hard and persistently. At ADX>20, we pick up too much midrange noise — false starts where momentum looks like it's building but fizzles within days. That costs roughly 5 percentage points of alpha per quarter. ADX>25 filters out the fakes and lets through the real moves.

The Quarters That Mattered — and the One That Hurt

Q2 2022 is the proof point. Ethereum dropped 69% — deeper than any other major asset we track. Our bearish signal fired early, delivering +29.25% alpha. Not from clever trading. From not holding during the crash.

The hardest quarter was Q3 2025. ETH rallied +72.4% and our strategy had only 13% time in market — sitting in cash while the price ripped upward. Result: -84.56% alpha. That wasn't a malfunction. The system waited for confirmed trend strength in a quarter where waiting meant missing the move entirely. Strip it out and the numbers look better. We don't strip it out — it happened, and it will happen again.

Who This Serves

ETH's signal profile is Tier 2: bearish signal detection. Same tier as BTC, same reason — the value concentrates in downturns, not across all market conditions.

If you can stomach a 69% drawdown without panic-selling, buy-and-hold has historically matched our system. That's the honest benchmark.

But most people can't. Most people sell at -40%, lock in their losses, then watch the recovery from the sidelines. A systematic signal — based on 5 years of data across 20 quarters — replaces that emotional decision with a rule. The rule costs -0.54% per quarter. The panic sell costs much more.

We don't know if ETH's crash patterns will repeat. Ethereum is still evolving — proof-of-stake is young, the L2 ecosystem is shifting. The Q2 2022 result is evidence, not a guarantee.

If you hold Ethereum, our signals replace the hardest decision — when to step aside during a crash — with a systematic rule that earned +29.25% alpha the last time it mattered.

This is educational content, not financial advice. Past performance does not guarantee future results. Based on 5-year daily data through Q1 2026, Polygon.io data.