Reading BTC performance
BTC cash-flow IRR tells you the annual return implied by the investment’s dated BTC-equivalent flows. The amounts tell you how much went in, how much came back and how much remains a model value. Use both.
Start with the amounts
| Measure | What to read |
|---|---|
| Contractual BTC | Actual originated Agreements × one BTC. A stopped origination plan can contain fewer Agreements than originally planned. |
| Gross BTC deployed into Agreements | Purchase dollars divided by each Agreement’s own entry price: one BTC per Agreement at par, including when entry prices differ within the month. A premium or discount changes the funded amount. Recycled capital can appear in more than one purchase. |
| Gross Holder receipts | Modeled receipts after their contractual deductions. Do not subtract the servicing fee again. |
| Net cash contributed / recovered | Negative / positive monthly net cash, including the selected hedge’s modeled costs and settlements. These differ from gross activity. |
| Signed horizon derivative value | Model value of positions still open. Positive value is an asset; negative value is a liability. Neither is already settled cash. |
| Economic contribution / recovery | The same monthly split with the signed horizon value included once at the end. A liability can create a hypothetical terminal contribution. |
| BTC surplus | Recovery minus contribution on the named basis. It is an amount in BTC equivalents, not a return rate or wallet balance. |
The cash and economic views reconcile:
economic recovery − economic contribution = cash recovery − cash contribution + signed horizon value.
For 24 cohorts of ten par Agreements, contractual BTC and gross BTC deployment are both 240 BTC. Earlier receipts can offset later purchases, so net additional contributions may be below 240 BTC. The cohort table shows unhedged purchase funding, fee-net receipts, gain and dated IRR. Cohort gross amounts and gains add to the book; cohort IRRs and monthly-net contribution ratios do not. Shared hedge costs are reported at book level unless an allocation rule is explicitly supplied.
Engine 0.6.0 introduced this entry-funding convention; 0.6.1 retains it while correcting monthly Coin-delta sizing. Earlier versions translated purchase dollars at the monthly reporting price; entry dispersion could therefore show 241.9214 BTC equivalents for the default 240-Agreement case. Old saved results keep that earlier definition and need a fresh run before comparison with current results.
Show both contribution and recovery sides. A horizon mark can flip a month’s sign, so adding it to recovery alone does not always reconcile. Sum cash flows over time; use the final observation for a stock such as an open position’s value.
A total return is not always an annual rate
With one contribution of 100 BTC and one recovery of 110 BTC, the recovery ratio is 1.10× and total return is 10%. If the flows are exactly one year apart, annualized IRR is also 10%. Five years apart gives about 1.92% a year. Other dated contributions and receipts change the rate again. Costs must already be included in the flow amounts being compared.
BTC cash-flow IRR remains useful when Agreements pay over time: it accounts for the dates and amounts. It uses the original modeled BTC-equivalent flows and reports unavailable or multiple-root diagnostics where needed. At constant spot, equivalent USD and BTC flow vectors have the same IRR within numerical tolerance. Changing Bitcoin prices can make their returns very different.
The net recovery ratio is recovery divided by contribution, with economic and realized-cash versions named separately. Zero contribution or a non-finite ratio makes it unavailable. The legacy net outcome per BTC of Agreement purchases uses gross purchase BTC equivalents as its denominator and signed hedge flows in its numerator. That is a different ratio. For a flat-price example with a purchase of 1, receipt of 1.5 and hedge cost of 0.2, the legacy Coin ratio is 1.30× while the USD combined multiple is 1.25×. The difference is convention, not currency performance.
What holding BTC means here
Current Research compares each strategy with retaining its same dated net BTC-equivalent contributions. Show that contribution amount beside the surplus. Each strategy can need a different amount; a larger absolute surplus alone does not establish a better use of the same starting capital.
Legacy shelf alternatives use a contractual one-coin-per-Agreement reference and their own cost, timing and collateral assumptions. Sharing market paths does not make them equal-budget investments. A sampled hedge result does not guarantee a floor, even if no path in that sample loses BTC.
A complete wallet comparison would start each strategy with the same BTC budget and track idle BTC, USD cash, conversion costs, reserves, collateral, liabilities and additional transfers. It would also say what happens when the wallet cannot meet a call. That model is not implemented. Do not interpret BTC cash-flow IRR as complete-wallet CAGR.
Reporting currency, cash and value
ForwardFlow funds Agreement purchases at their actual entry prices. It converts subsequent USD receipts, hedge cash and remaining values at the stated monthly USD/BTC price. These are explicit timing assumptions; the model does not execute a currency trade or prove an actual venue settlement. Instruments can use different quote units, settlement assets and collateral rules. Deribit’s inverse option specification, for example, describes actual BTC premiums and settlement; it does not certify that this model implements that venue’s complete rules.
Purchase-yield Agreement marks explain monthly P&L under a cost-calibrated flat-continuation convention. They are not certified reporting fair values. IFRS 13’s fair-value concept concerns a current market-participant exit value, which cost calibration alone cannot establish.
CFA Institute’s GIPS handbook distinguishes money-weighted returns sensitive to external-flow timing from time-weighted returns that neutralize those flows. A complete account return must define the account boundary and include its assets and cash. This is useful measurement context; ForwardFlow does not claim GIPS compliance.
See the workspace guide, hedging formulas, MCP capabilities and release model card.