PEPE: What Our Signals Do

A memecoin with a profit factor of 1.59 and positive quarterly alpha. If that sentence surprises you, good — it surprised us too.

PEPE is the leading memecoin after DOGE, launched in 2023 with no utility, no roadmap, and no pretense of being anything other than a speculative vehicle. We added it because the data said to. The backtest numbers are better than several "serious" projects in our system.

The Backtest: 4h MACD + ADX>40

PEPE runs on the 4-hour timeframe with an ADX threshold of 40 — the same high-conviction filter we use for SUI. Memecoins are noisy by nature. Lower ADX thresholds let through too many false signals during the long stretches where PEPE drifts sideways on low volume. ADX>40 means we only enter when momentum is strong enough to follow through.

The 4h timeframe matters here. PEPE's moves happen fast — a daily MACD crossover often fires after the move is half over. The 4h chart catches entries earlier, which is critical for an asset that can rally 40% in two days and give it all back by Friday.

Why These Numbers Are Real — And Why They Need Context

PEPE is down 73% over the study window. The strategy returned +28%. That is a 101-percentage-point gap, and it comes from the same mechanism that drives AVAX's results: the strategy exits before the worst drawdowns and re-enters on the recoveries.

The mean quarterly alpha of +10.3% is genuinely strong. Unlike SUI (−10.2% quarterly alpha), PEPE's strategy adds value in most quarters, not just the catastrophic ones. The Sharpe ratio of +0.37 confirms this — it is positive, meaning the returns compensate for the volatility on a risk-adjusted basis.

This earns PEPE a Tier 1 classification in our system. The signals are consistent enough to trust.

The caveat: two years of data. PEPE launched in 2023, and memecoins can go to zero. Two years is enough to see patterns but not enough to survive a full crypto winter. Every metric here could look different after 2028.

What the Signals Are Good At

PEPE's biggest moves are driven by social media momentum — viral moments, exchange listings, whale buys that get screenshotted and shared. These create sharp, directional price spikes that ADX>40 captures well. When PEPE starts moving with conviction, ADX climbs fast because the moves are large and sustained (for a memecoin).

The bearish signals are arguably more valuable than the bullish ones. PEPE's declines are brutal and fast. A bearish MACD crossover at 4h with ADX>40 means momentum has decisively shifted. Getting out when this fires has historically avoided the worst of PEPE's drawdowns.

Where They Struggle

The sideways death zone. PEPE can trade in a narrow range for weeks, occasionally spiking 15% on a meme trend and fading just as fast. These spikes rarely push ADX past 40, so the strategy sits in cash. Most of the time that is the right call — the spikes fade. But occasionally a real move starts as a meme spike and the strategy misses the first leg.

Also: PEPE has no fundamentals to analyze. There is no TVL, no developer activity, no protocol revenue. The price is pure sentiment. Our strategy treats that as a feature, not a bug — MACD reads price action, not fundamentals — but it means there is no "floor" if sentiment turns permanently.

What to Expect

About 24 signals per year — roughly two per month. PEPE is long-only in our system: buy on bullish crossovers that pass ADX>40, exit to cash on bearish. No shorting.

For background on PEPE's price behavior and what drives it, see What Is PEPE?.

PEPE is the most unlikely Tier 1 asset in our system — a memecoin with positive quarterly alpha and a strategy that turned a −73% hold into a +28% return. The numbers are real, but two years of data on a fundamentals-free token demands humility about how long the edge lasts.

This is educational content, not financial advice. Past performance does not guarantee future results. Based on ~2 years of 4-hour data from Polygon.io (2023 – Oct 2026).