How to read this record
In its first year, the record says more about how the program is run than about how good it is. This note sets out what can be checked, and when.
BTC-1 publishes its record from the first day, under rules fixed before that day. A young record answers different questions from an old one, so this note sets out what a reader can check at each stage.
The first year: the process
Daily returns from a leveraged bitcoin program are noisy. A few months of them say very little about the average, and a year not much more. The record therefore shows no Sharpe ratio until it covers twelve full months, and no annualized return.
What a young record can show is whether the program is run as described. Each day's figures appear the following day, or an incident explains the delay. The Monthly Report appears on the third of each month, whatever the month, and states whether three ledgers agreed to within 0.01 USDT. A day, once published, does not change, and a month's figures stop changing when the month closes. An error is corrected by a separate notice that says what was wrong, and the original stays in place. All of this is set out in the Methodology, and all of it can be checked from the first month.
Three common misreadings
Comparing the account with bitcoin directly. The account trades at up to three times exposure, while the benchmark holds bitcoin at one. The record therefore publishes a derived series, each day's return divided by three, and draws it beside the benchmark. The as-traded line shows what the account went through; the derived line is the one to compare.
Treating a drawdown as news. Before the record began we published the drawdowns, losing stretches and time under water the program is expected to withstand, derived from its backtest, with three levels: review, optional half-size positions, and full re-validation. They are in the Risk Limits and cannot be moved while the account is in drawdown. The record page shows the account's position against each level, so a drawdown can be read against the range set for it.
Treating a drawdown as exact. Drawdowns are measured once a day, at the end of the UTC day, on the index of returns, so deposits and withdrawals do not register as gains or losses. A low reached and recovered within the day does not appear, so every drawdown in the record is a lower bound, as the Methodology states.
What is already fixed
What is measured, how, and what happens when something goes wrong were fixed and timestamped on Bitcoin before the first day was valued. Any change is announced before it takes effect. If the program fails its program review, it is retired, and its record is closed and left in place. A new program would start a new record.
For the first year, the useful question is whether these rules held. Whether the returns are good takes longer to answer.