Bitcoin or Dollar Returns: Same Strategy, Opposite Results

On January 1, 2022, two investors each placed the equivalent of $46,000 in a market neutral strategy. Their two managers delivered as expected 5% over the year. But by December 31, the first had lost 62% of his capital in dollars, while the second had gained 5%. No one was wrong. The first measured his return in bitcoins, the second in dollars, and bitcoin fell by 64% over the year.

Our article on funding hinted at this: the same flow can be cashed in either currency. This fourth installment addresses the question in full. You will first see what a strategy is neutral relative to. Then, what 5% in bitcoins and 5% in dollars become in a collapsing market, and then in a recovering market. Finally, why a French saver must add the euro to the calculation. And what to ask a manager before comparing two performances.

This article is brought to you by DCY. To discover their approach, visit dcy.fund.

Key Points

• Market neutral means nothing without the currency of account. A strategy neutral in bitcoins remains fully exposed to the price as soon as it is measured in dollars, and the reverse is also true.
• In 2022, 5% gained in bitcoins represented a loss of 62% in dollars. In 2023, the same 5% was worth 168% more in dollars, while 5% gained in dollars bought 59% fewer bitcoins.
• For a saver counting in euros, 5% gained in dollars in 2025 turned into a loss of about 7%, as the dollar fell by 11.6% against the euro over the year.
• The right currency of account is that of future expenses. Before comparing two funds, one must know in which currency each performance is calculated, and whether it is hedged.

Neutral Relative To What?

The first article in this series defined delta as the share of bitcoin movement that a position undergoes. It took the example of a covered spot purchase with a sale of the same size on a perpetual contract. At zero, the price can go wherever it wants, the position neither gains nor loses anything. One detail was missing from the definition, because it was taken for granted. Everything was counted in dollars.

Change the unit and the picture flips. A bitcoin held in a wallet has a delta of 1 in dollars, as it follows the price in both directions. In contrast, counted in bitcoins, it is worth one bitcoin on January 1 and one bitcoin on December 31, regardless of what happens in between. The dollar does the opposite. Stable for those counting in dollars, it loses or gains value as soon as it is expressed in bitcoins. No position is neutral in all currencies at once. Therefore, a strategy announced as market neutral without further precision leaves half the information aside.

Two Ways to Make Capital Work

Neutral strategies fall into two families, depending on the currency they start from and in which they report their accounts.

The first starts from dollars, or more precisely from stablecoins. The cash-and-carry from our second installment is the typical example. Indeed, the spot purchase and the sale of the contract offset each other, and the gain accumulates in dollars. Bitcoin can double or lose half its value. The capital, however, remains in dollars. It grows solely from the strategy's yield.

In the second family, the starting point is a stock of bitcoins that its holder refuses to sell. He entrusts them to strategies designed so that their result, counted in bitcoins, does not depend on the price. The inverse contracts, margined and settled in bitcoins, which were discussed in our article on funding, serve precisely this purpose. The goal is to have more. And their value in dollars follows the market as if nothing happened.

2022, 2023: Two Years, Two Winners

Let’s return to the two investors mentioned in the introduction, with prices that anyone can find in Binance's history. Bitcoin was worth about $46,200 on January 1, 2022. It was priced at $16,500 on December 31, a decrease of 64%, then $42,300 a year later.

By the end of 2022, the Bitcoin investor holds 5% more Bitcoin than in January. In dollars, he lost 62%. The one who counted in dollars gained 5%, and with his dollars, he could buy nearly three times more Bitcoin in December than at the beginning of the year.

The following year, the roles are reversed. The 5% in Bitcoin is worth 168% more in dollars, as the price multiplied by 2.6. The 5% in dollars, however, allows for the purchase of 59% less Bitcoin than on January 1.

Over the two years combined, the dollar investor finishes ahead, regardless of the currency chosen for the account. But simply shifting the window by a year, from early 2023 to late 2024, allows Bitcoin, multiplied by more than five, to give a significant advantage to the other. The managers, however, changed nothing. The ranking depends on the chosen currency and the starting date.

The French Saver Counts in Euros

The reader of these lines has a third unit, and it is often this one that decides when it comes time to do the accounts, namely the euro. A neutral strategy in dollars is not neutral in euros. The dollar then becomes a risk. The reference rate published by the ECB went from 1.0389 dollars for one euro on December 31, 2024, to 1.1750 on December 31, 2025. Over the year, the dollar thus lost 11.6% against the euro, and the 5% gained in dollars turned into a loss of about 7% once converted.

This risk can be hedged. The manager, or a dedicated share class, sells dollars forward against euros, and the result becomes readable in euros, free from most of the currency effect. This hedge has a cost, which mainly depends on the difference between the interest rates of the two currencies. When dollar rates exceed those of the eurozone, which has been the case for several years, this cost subtracts from the return. Before comparing two figures, it is better to know if one is hedged and the other is not.

Which Currency to Choose?

To choose, the simplest is to start from the expenses that the investor will have to settle. A company that pays salaries in euros needs a result in euros. The Bitcoin investor thinks differently. If he measures his wealth in Bitcoin and has no intention of selling, he reasons in terms of the number of Bitcoins. And a drop in price does not change his account, as long as he does not sell. As for the investor looking for income independent of the crypto market, he will look more towards dollar strategies, provided he monitors the exchange rate or chooses a hedged share in euros.

It remains to ask the right questions to the manager. In what currency is the performance calculated, and is the published figure hedged against the euro? What do the fees pertain to? For a share denominated in bitcoins, the performance fee is generally calculated on the bitcoins earned, including the year when their value in euros decreased. The high water mark, the highest point beyond which the manager can take their share of the gains, is also expressed in the currency of the share.

Bitcoin reached its record on October 6, 2025, at $126,200, and on October 1, 2026, it was worth $83,600, a third less. A holder who has made their bitcoins work since the peak has gained. But if they obtained 5% more, they still lost nearly 30% in dollars. Both balances are accurate, and a manager who only publishes one must say which one.

This article was brought to you by DCY. Find their strategies in bitcoins and dollars at dcy.fund.