OBTC 10-K & 10-Q changes, risk factors and insider trading
Osprey Bitcoin Trust · Nasdaq · Commodity Contracts Brokers & Dealers · CIK 1767057 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The Shares are speculative and involve a high degree of risk. Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this Annual Report.”
New heading “The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.”
New heading “The value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of Bitcoin as a digital asset, including the fact that digital assets are bearer instruments and loss, theft, or compromise of the associated private keys could result in permanent loss of the asset, and the capabilities and development of blockchain technologies such as the Bitcoin blockchain.”
New heading “Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the continued acceptance of Bitcoin.”
New heading “Potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, adversely affect an investment in the Trust.”
New heading “The open-source structure of the Bitcoin network protocol means that the core developers and other contributors are generally not directly compensated for their contributions in maintaining and developing the Bitcoin network protocol. A failure to properly monitor and upgrade the Bitcoin network protocol could damage the Bitcoin network and an investment in the Trust.”
New heading “Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.”
New heading “Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of such digital assets.”
New heading “If the digital asset award for mining blocks and transaction fees for recording transactions on the Bitcoin network are not sufficiently high to incentivize miners, or if certain jurisdictions continue to limit mining activities, miners may cease expanding processing power or demand high transaction fees, which could negatively impact the value of Bitcoin and the value of the Shares.”
New heading “If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.”
New heading “A temporary or permanent “fork” could adversely affect the value of the Shares.”
New heading “Shareholders may not receive the benefits of any forks or “airdrops.””
New heading “In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Shares.”
New heading “A hard fork could change the source code to the Bitcoin network, including the 21 million Bitcoin supply cap.”
New heading “Any name change and any associated rebranding initiative by the core developers, users or miners of Bitcoin or the Bitcoin network may not be favorably received by the digital asset community, which could negatively impact the value of Bitcoin and the value of the Shares.”
New heading “The value of the Shares relates directly to the value of Bitcoin, the value of which may be highly volatile and subject to fluctuations due to a number of factors.”
New heading “Because the Trust holds only Bitcoin and cash, an investment in the Trust may be more volatile than an investment in a more broadly diversified portfolio.”
New heading “Due to the unregulated nature and lack of transparency surrounding the operations of digital asset platforms, which may experience fraud, manipulation, security failures or operational problems, as well as the wider Bitcoin market, the value of Bitcoin and, consequently, the value of the Shares may be adversely affected, causing losses to Shareholders.”
New heading “The Index has a limited performance history, the Index price could fail to track the global Bitcoin price, and a failure of the Index could adversely affect an investment in the Shares.”
New heading “The Index used to calculate the value of the Trust’s Bitcoin may be volatile, adversely affecting the value of the Shares.”
New heading “Competition from central bank digital currencies (“CBDCs”) and emerging payments initiatives involving financial institutions could adversely affect the value of Bitcoin and other digital assets.”
New heading “Prices of Bitcoin may be affected due to stablecoins (including Tether and USDC), the activities of stablecoin issuers and their regulatory treatment.”
New heading “Competition from the emergence or growth of other digital assets or methods of investing in Bitcoin could have a negative impact on the price of Bitcoin and adversely affect the value of the Shares.”
New heading “Competition from other exchange-traded Bitcoin products could adversely affect the Trust and the value of the Shares.”
New heading “The Trust may be negatively impacted by the effects of public health emergencies on the global economy and the markets and service providers relevant to the performance of the Trust.”
New heading “The amount of the Trust’s assets represented by each Share will decline over time as the Trust pays the Management Fee and additional expenses borne by the Trust, and as a result, the value of the Shares may decrease over time.”
New heading “The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of Bitcoin. The Trust is not actively managed and will be affected by a general decline in the price of Bitcoin.”
New heading “The value of the Shares may be influenced by a variety of factors unrelated to the value of Bitcoin.”
New heading “The liquidity of the Shares may also be affected by the withdrawal from participation of Authorized Participants.”
New heading “There may be situations where an Authorized Participant is unable to redeem a Basket of Shares. To the extent the value of Bitcoin decreases, these delays may result in a decrease in the amount the Authorized Participant will receive when the redemption occurs, as well as a reduction in liquidity for all Shareholders in the secondary market.”
New heading “The Trust is an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Shares less attractive to investors.”
New heading “The lack of an active trading market for the Shares may result in losses on your investment at the time of disposition of your Shares.”
New heading “If the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants intended to keep the price of the Shares closely linked to the price of Bitcoin may not exist and, as a result, the price of the Shares may fall or otherwise diverge from the NAV.”
New heading “The use of cash creations and redemptions, as opposed to in-kind creations and redemptions, may adversely affect the arbitrage transactions by Authorized Participants intended to keep the price of the Shares closely linked to the price of Bitcoin and, as a result, the price of the Shares may fall or otherwise diverge from the NAV.”
New heading “As an owner of Shares, you do not have the rights normally associated with ownership of other types of shares.”
New heading “The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the Shareholders.”
New heading “Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act or the protections afforded by the Commodity Exchange Act.”
New heading “Security threats to the Trust’s account at the Bitcoin Custodian could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the value of the Shares.”
New heading “Bitcoin transactions are irrevocable, and stolen or incorrectly transferred Bitcoin may be irretrievable. As a result, any incorrectly executed Bitcoin transactions could adversely affect the value of the Shares.”
New heading “The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor, Transfer Agent and Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s Bitcoin for which no person or entity is liable.”
New heading “Loss of a critical banking relationship for, or the failure of a bank used by, the Prime Execution Agent could adversely impact the Trust’s ability to create or redeem Baskets, or could cause losses to the Trust.”
New heading “The Trust may be required, or the Sponsor may deem it appropriate, to terminate and liquidate at a time that is disadvantageous to Shareholders.”
New heading “The Trust Agreement includes provisions that limit Shareholders’ voting rights and restrict Shareholders’ right to bring a derivative action.”
New heading “Your right to bring derivative actions is limited and it might be difficult for minority Shareholders to locate other Shareholders to reach the ownership threshold for derivative actions.”
New heading “The Index price being used to determine the NAV of the Trust may not be consistent with GAAP. The net assets reported in the Trust’s periodic financial statements may differ, in some cases significantly, from the Trust’s NAV determined using the Index pricing.”
New heading “Extraordinary Expenses resulting from unanticipated events may become payable by the Trust, adversely affecting the value of the Shares.”
New heading “The Trust’s delivery or sale of Bitcoin to pay expenses or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution from the Trust.”
New heading “The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor, the Trustee, the Trust Administrator, the Bitcoin Custodian or the Cash Custodian under the Trust Documents.”
New heading “Intellectual property rights claims may adversely affect the Trust and the value of the Shares.”
New heading “If the Trust fails to maintain an effective system of internal controls, it may not be able to accurately or timely report our financial condition or results of operations or prevent fraud which may adversely affect the market for the Shares.”
New heading “Digital asset markets in the United States currently exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of Bitcoin or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of Bitcoin, mining activity, digital wallets, the provision of services related to trading and custodying Bitcoin, the operation of the Bitcoin network, or the digital asset markets generally.”
New heading “A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust.”
New heading “Competing industries may have more influence with policymakers than the digital asset industry, which could lead to the adoption of laws and regulations that are harmful to the digital asset industry.”
New heading “Regulatory changes or actions in foreign jurisdictions may affect the value of the Shares or restrict the use of one or more digital assets, mining activity or the operation of their networks or the digital asset platform market in a manner that adversely affects the value of the Shares.”
New heading “If regulators or public utilities take actions that restrict or otherwise impact mining activities, there may be a significant decline in such activities, which could adversely affect the Bitcoin network and the value of the Shares.”
New heading “If regulators subject the Trust, the Trustee or the Sponsor to regulation as a money service business or money transmitter, this could result in Extraordinary Expenses to the Trust, the Trustee or the Sponsor and also result in decreased liquidity for the Shares.”
New heading “If the Bitcoin network is used to facilitate illicit activities, businesses that facilitate Bitcoin transactions could be at increased risk of criminal or civil liability, or of having services cut off, which could negatively affect the price of Bitcoin and the value of the Shares.”
New heading “Regulatory changes or interpretations could obligate the Trust, the Trustee or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust.”
New heading “The treatment of digital currency for U.S. federal income tax purposes is uncertain.”
New heading “Future developments regarding the treatment of digital currency for U.S. federal income tax purposes could adversely affect the value of the Shares.”
New heading “Future developments in the treatment of digital currency for tax purposes other than U.S. federal income tax purposes could adversely affect the value of the Shares.”
New heading “A U.S. Tax-Exempt Shareholder may recognize “unrelated business taxable income” as a consequence of an investment in Shares.”
New heading “Shareholders could incur a tax liability without an associated distribution of the Trust.”
New heading “A hard “fork” of the Bitcoin blockchain could result in Shareholders incurring a tax liability.”
New heading “Although the Bitcoin Custodian is a fiduciary with respect to the Trust’s assets, it could resign or be removed by the Sponsor, which may trigger early dissolution of the Trust.”
New heading “Coinbase serves as the Bitcoin custodian for several competing exchange-traded Bitcoin products, which could adversely affect the Trust’s operations and ultimately the value of the Shares.”
New heading “The Trust’s Authorized Participants act in similar or identical capacities for several competing exchange-traded Bitcoin products which may impact the ability or willingness of one or more Authorized Participants to participate in the creation and redemption process, adversely affect the Trust’s ability to create or redeem Baskets and adversely affect the Trust’s operations and ultimately the value of the Shares.”
New heading “Shareholders and Authorized Participants lack the right under the Custodial Services Agreement to assert claims directly against the Bitcoin Custodian, which significantly limits their options for recourse.”
New heading “Risk Factors Related to ERISA”
New heading “The application of ERISA (including the corresponding provisions of the Code and other relevant laws) may be complex and dependent upon the particular facts and circumstances of the Trust and of each Plan, and it is the responsibility of the appropriate fiduciary of each investing Plan to ensure that any investment in the Trust by such Plan is consistent with all applicable requirements. Each Shareholder, whether or not subject to Title I of ERISA or Section 4975 of the Code, should consult its own legal and other advisors regarding the considerations discussed above and all other relevant ERISA and other considerations before purchasing the Shares.”
Removed heading “An investment in the Units involves material risks as described below. These risks should also be read in conjunction with the other information included in this Annual Report, including the Trust’s financial statements and related notes thereto.”
Removed heading “Summary Risk Factors”
Removed heading “Risk Factors Related to Digital Assets”
Removed heading “Digital assets such as Bitcoin were only introduced within the past decade, and the medium-to-long term value of the Units is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets.”
Removed heading “The Bitcoin Network is part of a new and rapidly evolving industry, and the value of the Units depends on the development and acceptance of the Bitcoin Network.”
Removed heading “Digital asset networks are developed by a diverse set of contributors and the perception that certain high-profile contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital asset.”
Removed heading “Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of such digital asset.”
Removed heading “A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and the value of the Units, and result in potentially extraordinary, non-recurring expenses to, or termination of the Trust”
Removed heading “Digital asset networks face significant scaling challenges and efforts to increase the volume of transactions may not be successful.”
Removed heading “If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin Network, or otherwise obtains control over the Bitcoin Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Blockchain to adversely affect the value of the Units or the ability of the Trust to operate.”
Removed heading “A temporary or permanent fork or a “clone” could adversely affect the value of the Units.”
Removed heading “Unitholders may not receive the benefits of any forks or “airdrops.””
Removed heading “In the event of a hard fork of the Bitcoin Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Units.”
Removed heading “If the digital asset award for solving blocks and transaction fees for recording transactions on the Bitcoin Network are not sufficiently high to incentivize miners, miners may cease expanding processing power or demand high transaction fees, which could negatively impact the value of Bitcoin and the value of the Units.”
Removed heading “Any name change and any associated rebranding initiative by the core developers of Bitcoin may not be favorably received by the digital asset community, which could negatively impact the value of Bitcoin and the value of the Units.”
Removed heading “The Bitcoin Network requires significant electricity to mine and it is possible that certain jurisdictions will implement regulations regarding the energy consumption of the Bitcoin Network, which could result in a significant reduction in mining activity and adversely affect the security of the Bitcoin Network.”
Removed heading “The failure of several prominent crypto trading venues and lending platforms has impacted and may continue to impact the broader crypto economy, which could have an adverse impact on the Trust.”
Removed heading “Risk Factors Related to the Bitcoin Markets”
Removed heading “The value of the Units relates directly to the value of Bitcoins, the value of which may be highly volatile and subject to fluctuations due to a number of factors.”
Removed heading “Due to the unregulated nature and lack of transparency surrounding the operations of Bitcoin exchanges, they may experience fraud, business failures, security failures or operational problems, which may adversely affect the value of Bitcoin and, consequently, the value of the Units.”
Removed heading “Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity.”
Removed heading “Competition from the emergence or growth of other digital assets or methods of investing in Bitcoin could have a negative impact on the price of Bitcoin and adversely affect the value of the Units.”
Removed heading “Failure of funds that hold digital assets or that have exposure to digital assets through derivatives to receive SEC approval to list their shares on exchanges could adversely affect the value of the Units.”
Removed heading “NAV may not always correspond to the weighted-average market price of Bitcoin and, as a result, Units may be purchased (or redeemed, if ever permitted) at a value that differs from the secondary market price of the Units.”
Removed heading “Suspension or disruptions of market trading may adversely affect the value of units.”
Removed heading “The lack of active trading markets for the Units may result in losses on an investment in the Trust at the time of disposition of Units.”
Removed heading “The Trust’s acquisition and sale of Bitcoin may impact the supply and demand of Bitcoin, which may have a negative impact on the price of the Units.”
Removed heading “A possible “short squeeze” due to a sudden increase in demand for the Units that largely exceeds supply may lead to price volatility in the Units.”
Removed heading “The Trust’s buying and selling activity associated with the issuance and redemption (if any) of Units may adversely affect an investment in the Units.”
Removed heading “Difficulties or limitations in the processes of issuance and redemption (if any) of Units may interfere with opportunities for arbitrage transactions intended to keep the price of the Units closely linked to the price of Bitcoin, which may adversely affect an investment in the Units.”
Removed heading “Disruptions at OTC trading desks and potential consequences of an OTC trading desk’s failure could adversely affect an investment in the Units.”
Removed heading “Disruptions at Bitcoin exchanges and potential consequences of a Bitcoin exchange’s failure could adversely affect an investment in the Units.”
Removed heading “Momentum pricing of Bitcoin may subject the Bitcoin price to greater volatility and adversely affect an investment in the Units.”
Removed heading “Risk Factors Related to the Trust and the Units”
Removed heading “As the Sponsor and its management have little history of operating the Trust, their experience may be inadequate or unsuitable to manage the Trust.”
Removed heading “Because of the lack of an ongoing redemption program for Unitholders that invest directly into the Trust (as opposed to Unitholders who acquire Units in the public secondary trading market) there is no arbitrage mechanism to keep the price of the Units closely linked to the value of the underlying Bitcoin holdings held by the Trust, less the Trust’s expenses and other liabilities, on any secondary trading market.”
Removed heading “The Trust has only a limited performance history.”
Removed heading “The value of the Units could decrease if unanticipated operational or trading problems arise.”
Removed heading “Substantial sales or dispositions by a large Unitholder could negatively impact the price of our Units in the secondary market.”
Removed heading “Fees and expenses are charged regardless of profitability.”
Removed heading “The Trust qualifies as a “smaller reporting company” and the reduced disclosure requirements applicable to smaller reporting companies may make the Units less desirable.”
Removed heading “The security of our Bitcoin Holdings cannot be assured, by the Trust, the Custodian or any other person.”
Removed heading “The Custodian is not liable for any lost profits or any special, incidental, indirect, intangible, or consequential damages arising out of or in connection with authorized or unauthorized use of the Coinbase Custody site or the custodial services.”
Removed heading “The Trust does not maintain audit or inspection rights under the Custodial Services Agreement, and as such our Bitcoin Holdings held in the custodial account cannot be independently verified.”
Removed heading “Possibility of termination of the Trust may adversely affect a Unitholder’s portfolio.”
Removed heading “Any errors, discontinuance or changes in determining the value of the Bitcoin held by the Trust may have an adverse effect on the value of the Units.”
Removed heading “Unitholders may be adversely affected by redemption orders that are subject to postponement, suspension, or rejection under certain circumstances.”
Removed heading “As a Unitholder, you will not have the rights normally associated with ownership of Units of other types of investment vehicles. For example, in comparison to those of securityholders in traditional operating companies, you will have no voting rights.”
Removed heading “Your right to bring derivative actions is limited and it might be difficult for minority Unitholders to locate other Unitholders to reach the ownership threshold for derivative actions.”
Removed heading “The value of the Units will be adversely affected if the Trust is required to indemnify the Sponsor or the Custodian as contemplated in the Trust Agreement or the Custodial Services Agreement.”
Removed heading “The Trust’s Bitcoin Holdings could become illiquid, which could cause large losses to Unitholders at any time or from time to time.”
Removed heading “Transactions in Bitcoin are irreversible and the Trust may be unable to recover improperly transferred Bitcoin.”
Removed heading “The Trust’s Bitcoin may be lost, stolen or subject to other inaccessibility.”
Removed heading “Any disruptions to the computer technology used by the Trust or its service providers could adversely affect the Trust’s ability to function and an investment in the Units.”
Removed heading “The Sponsor’s computer infrastructure may be vulnerable to security breaches. Any such problems could cause interruptions in the Trust’s operations and adversely affect an investment in the Units.”
Removed heading “Technology system failures could cause interruptions in the Trust’s ability to operate.”
Removed heading “Because the Units reflect the estimated accrued but unpaid expenses of the Trust, the number of Bitcoins represented by a Unit will gradually decrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses.”
Removed heading “Unitholders may not be able to withdraw or value his/her units upon death, legal disability, bankruptcy, insolvency, dissolution or withdrawal from the Trust.”
Removed heading “The Trust’s Bitcoin Holdings may be considered property of a bankruptcy estate should our Custodian initiate bankruptcy proceedings and the Trust could be considered an unsecured creditor, and the Custodian’s assets may not be adequate to satisfy a claim by the Trust.”
Removed heading “Risks Associated with the Index”
Removed heading “We have concluded that certain of our previously issued financial statements should not be relied upon and have restated certain of our previously issued financial statements which was time-consuming and expensive and could expose us to additional risks that could have a negative effect on our Company.”
Removed heading “We previously identified a material weakness in our system of internal controls. While we believe the material weakness has been fully remediated, new material weaknesses could result in additional material misstatements in our financial statements. We may be unable to develop, implement and maintain appropriate controls in future periods.”
Removed heading “Any dispute regarding the subscription agreement will be resolved by arbitration, which follows different procedures than in-court litigation and may be more restrictive to Unitholders asserting claims than in-court litigation.”
Removed heading “Unitholders are bound by the fee-shifting provision contained in the subscription agreement, which may discourage actions against us.”
Removed heading “The Trust relies on third-party service providers to perform certain functions essential to the affairs of the Trust and the replacement of such service providers could pose a challenge to the safekeeping of the Trust’s Bitcoins and to the operations of the Trust.”
Removed heading “Pandemics, epidemics and other natural and man-made disasters could negatively impact the value of the Trust’s holdings and/or significantly disrupt its affairs.”
Removed heading “Risk Factors Related to the Regulation of the Trust and the Units”
Removed heading “Regulation of the Bitcoin industry continues to evolve and is subject to change; future regulatory developments are impossible to predict but may significantly and adversely affect the Trust.”
Removed heading “Regulatory changes or actions may affect the value of the Units or restrict the use of Bitcoins, mining activity or the operation of the Bitcoin Network or the Bitcoin markets in a manner that adversely affects the value of the Units.”
Removed heading “To the extent that Bitcoin itself is determined to be a security, such determination may have an adverse effect on the value of your investment in the Trust.”
Removed heading “Regulatory changes or other events in foreign jurisdictions may have impacted the price of Bitcoin or may impact it in the future.”
Removed heading “The sale of the Units could be subject to SEC or state securities registration.”
Removed heading “The Trust is not a registered investment company.”
Removed heading “The Trust could be, or could become, subject to the Commodity Exchange Act.”
Removed heading “Trading on Bitcoin markets outside the United States is not subject to U.S. regulation, and may be less reliable than U.S. Markets.”
Removed heading “Future regulations may impose other regulatory burdens, which could harm the Trust or even cause the Trust to liquidate.”
Removed heading “Banks may not provide banking services, or may cut off banking services, to businesses that provide Bitcoin-related services or that accept Bitcoin as payment, which could directly impact the Trust’s operations, damage the public perception of Bitcoin and the utility of Bitcoin as a payment system and could decrease the price of Bitcoin and adversely affect an investment in the Units.”
Removed heading “It may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoin in one or more countries, and ownership of, holding or trading in Units may also be considered illegal and subject to sanctions.”
Removed heading “If the Bitcoin Network is used to facilitate illicit activities, businesses that facilitate transactions in Bitcoin could be at increased risk of criminal and civil lawsuits, or of having services cut off, which could negatively affect the price of Bitcoin and the value of the Units.”
Removed heading “If regulatory changes or interpretations of the Trust’s or Sponsor’s activities require registration as money services businesses under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act or as money transmitters or digital currency businesses under state regimes for the licensing of such businesses, the Trust and/or Sponsor could suffer reputational harm and also extraordinary, recurring and/or non-recurring expenses, which would adversely impact an investment in the Units.”
Removed heading “Laws and regulations may also be introduced or interpreted by regulators that lack experience in digital assets and blockchain technology. This may result in unclear rules with which compliance may be difficult.”
Removed heading “The digital assets industry is relatively new and has limited access to policymakers or lobbying organizations, which may harm the Trust’s ability to effectively react to proposed laws and regulation of digital assets adverse to the Trust’s business.”
Removed heading “Unitholders could incur a tax liability without an associated distribution.”
Removed heading “The treatment of Bitcoin for U.S. federal income tax purposes is uncertain.”
Removed heading “Future developments regarding the treatment of digital currency for U.S. federal income tax purposes could adversely affect the value of the Units.”
Removed heading “Future developments in the treatment of digital currency for tax purposes other than U.S. federal income tax purposes could adversely affect the value of the Units.”
Removed heading “A U.S. tax-exempt Unitholder may recognize UBTI a consequence of an investment in Units.”
Removed heading “Non-U.S. Unitholders may be subject to U.S. federal withholding tax on income derived from forks, airdrops and similar occurrences.”
Removed heading “Risk Factors Related to Potential Conflicts of Interest”
Removed heading “The respective officers, employees and/or affiliates of the Sponsor may trade in Bitcoin or other cryptocurrency markets for their own personal trading accounts, and in doing so may take positions opposite to those held by the Trust or may compete with the Trust for positions in the marketplace.”
Removed heading “If the Custodian resigns or is removed by the Sponsor or otherwise, without replacement, it could trigger early termination of the Trust, or the Sponsor would need to find and appoint a replacement custodian, which could pose a challenge to the safekeeping of the Trust’s Bitcoin.”
Removed heading “Unitholders may be adversely affected by the lack of independent advisers representing investors in the Trust.”
Largest changes
“In addition, over the past several years, some digital asset platforms have been closed due to fraud and manipulative activity, business failure or security breaches. In many of these instances, the customers of such digital asset platforms were not compensated or made whole for the partial or complete losses of their account balances in such digital asset platforms. …”see in full comparison
“The United States, China, Russia, India or other jurisdictions may take additional regulatory actions in the future that further restrict the right to acquire, own, hold, sell or use Bitcoin or to exchange Bitcoin for fiat currency. For example, the United States and other G7 leaders imposed expansive economic sanctions on Russia as a result of the conflict in Ukraine and new guidance issued by the Department of Treasury highlighted the expectation of compliance with such sanctions, including as it relates to transactions using virtual currency, such as Bitcoin. …”see in full comparison
“Thereafter, in November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity issues and likely insolvency. Shortly thereafter, FTX’s CEO resigned and FTX and several affiliates of FTX filed for bankruptcy. The U.S. Department of Justice (“DOJ”) subsequently brought criminal charges, including charges of fraud, violations of federal securities laws, money laundering, and campaign finance offenses, against FTX’s former CEO and others. …”see in full comparison
“Department of Justice levied a $110 million fine and an indictment against BTC-e, another Bitcoin exchange and one of its operators for financial crimes. The Department of Justice also seized the Internet domain of the exchange. Similar to the outcome of the Bitfinex breach, losses due to assets seized by FinCEN were allocated among exchange users. In addition, it has been reported that Bitcoin exchange Coincheck lost approximately $500 million to hackers in 2018 and that Bitcoin exchange Binance lost approximately $40 million to hackers in 2019. …”see in full comparison
“Extreme volatility may persist and the value of the Shares may significantly decline in the future without recovery. The digital asset markets may still be experiencing a bubble or may experience a bubble again in the future. For example, in the first half of 2022, each of Celsius Network, Voyager Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX Trading Ltd. …”see in full comparison
“If the processes of creation and redemption of Shares (which depend on timely transfers of Bitcoin to and by the Bitcoin Custodian and Prime Execution Agent) encounter any unanticipated difficulties due to, for example, the price volatility of Bitcoin, the insolvency, business failure or interruption, default, failure to perform, security breach, or other problems affecting the Prime Execution Agent, Bitcoin Custodian, Authorized Participants or Bitcoin Trading Counterparties, the closing of Bitcoin trading platforms due to fraud, failures, security breaches or otherwise, or network outages …”see in full comparison
Full comparison: every changed paragraph (484)
The Shares are speculative and involve a high degree of risk. Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this Annual Report.
An investment in the Units involves
material risks as described below. These risks should also be read in conjunction with the other information included in this Annual
Report, including the Trust’s financial statements and related notes thereto.
Summary Risk Factors
The following is a summary
of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of
operations. You should read this summary together with the more detailed description of each risk factor contained below.
The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so. These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for Bitcoin. In the 2021-2022 cycle, the price of Bitcoin peaked at $67,734 and bottomed at $15,632, marking a steep 77% drawdown. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout Bitcoin’s history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022. Over the course of 2023 and 2024, Bitcoin prices continued to exhibit extreme volatility. After the results of the U.S. presidential election in November 2024, the price of Bitcoin rallied to a then all-time high of over $100,000 in December 2024 based, in part, on the market’s perception that the new presidential administration would be pro-digital assets. During 2025, Bitcoin prices swung between a low of $76,737 to a high of $125,663.
Extreme volatility may persist and the value of the Shares may significantly decline in the future without recovery. The digital asset markets may still be experiencing a bubble or may experience a bubble again in the future. For example, in the first half of 2022, each of Celsius Network, Voyager Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX Trading Ltd. (“FTX”), one of the largest digital asset platforms by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity issues and likely insolvency, which were subsequently corroborated by its CEO. Shortly thereafter, FTX’s CEO resigned and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency, liquidation, or similar proceedings around the globe, following which the U.S. Department of Justice brought criminal fraud and other charges, and the SEC and CFTC brought civil securities and commodities fraud charges, against certain of FTX’s and its affiliates’ senior executives, including its former CEO. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX’s bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC. In response to these events (collectively, the “2022 Events”), the digital asset markets have experienced extreme price volatility and other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset markets. These events also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset markets were to be negatively impacted by similar events in the future, digital asset prices, including Bitcoin, may continue to experience significant volatility or price declines and confidence in the digital asset markets may be undermined. In addition, regulatory and enforcement scrutiny increased as a result of such events, including from, among others, the Department of Justice, the SEC, the CFTC, the White House and Congress, as well as state regulators and authorities. It is not possible to predict all of the risks of past or future events that may result in a loss of confidence in the digital asset ecosystem and/or expose the Trust, its service providers or the digital asset industry as a whole to extreme price volatility.
The value of Bitcoin as represented by the Index may also be subject to momentum pricing due to speculation regarding future appreciation in value, leading to greater volatility that could adversely affect the value of the Shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. The Sponsor believes that momentum pricing of Bitcoin has resulted, and may continue to result, in speculation regarding future appreciation in the value of Bitcoin, inflating and making the Index more volatile. As a result, Bitcoin may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in the Index and could adversely affect the value of the Shares.
Market participants may also act based on perceptions that digital assets are subject to a more favorable regulatory environment compared to that of traditional financial instruments. False perceptions about the regulatory oversight of Bitcoin may contribute to increased speculative interest, elevated trading volumes and inflated valuations.
Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. The Trust is not actively managed and does not take any actions to take advantage, or mitigate the impacts, of volatility in the price of Bitcoin.
The value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of Bitcoin as a digital asset, including the fact that digital assets are bearer instruments and loss, theft, or compromise of the associated private keys could result in permanent loss of the asset, and the capabilities and development of blockchain technologies such as the Bitcoin blockchain.
Digital assets such as Bitcoin were only introduced within the past 16 years, and the value of the Shares is subject to a number of factors over time relating to the capabilities and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and other technologies, their dependence on the role played by users, developers and miners and the potential for malicious activity. For example, the realization of one or more of the following risks could materially adversely affect the value of the Shares:
Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the continued acceptance of Bitcoin.
The Bitcoin network was first launched in 2009 and Bitcoin was the first cryptographic digital asset created to gain global adoption and critical mass. Although the Bitcoin network is the most established digital asset network, the Bitcoin network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the realization of one or more of the following risks could materially adversely affect the value of the Shares:
The Trust is not actively managed and does not have any formal strategy relating to the development of the Bitcoin network.
The governance of decentralized networks, such as the Bitcoin network, is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of any particular decentralized digital asset network, which may stymie such network’s utility and ability to grow and face challenges. The foregoing notwithstanding, the protocols for some decentralized networks, such as the Bitcoin network, are informally managed by a group of core developers that propose amendments to the relevant network’s source code. Core developers’ roles evolve over time, largely based on self-determined participation. If a significant majority of users and miners adopt amendments to a decentralized network based on the proposals of such core developers, such network will be subject to new protocols that may adversely affect the value of the relevant digital asset.
Potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, adversely affect an investment in the Trust.
The Bitcoin network uses a cryptographic protocol to govern the interactions within the Bitcoin network. A loose community known as the core developers has evolved to informally manage the source code for the protocol. Membership in the community of core developers evolves over time, largely based on self-determined participation in the resource section dedicated to Bitcoin on Github.com. The core developers can propose amendments to the Bitcoin network’s source code that, if accepted by miners and users, could alter the protocols and software of the Bitcoin network and the properties of Bitcoin. These alterations would occur through software upgrades, and could potentially include changes to the irreversibility of transactions and limitations on the mining of new Bitcoin, which could undermine the appeal and market value of Bitcoin. Alternatively, software upgrades and other changes to the protocols of the Bitcoin network could fail to work as intended or could introduce bugs, security risks, or otherwise adversely affect, the speed, security, usability, or value of the Bitcoin network or Bitcoin. As a result, the Bitcoin network could be subject to changes to its protocols and software in the future that may adversely affect an investment in the Trust.
The open-source structure of the Bitcoin network protocol means that the core developers and other contributors are generally not directly compensated for their contributions in maintaining and developing the Bitcoin network protocol. A failure to properly monitor and upgrade the Bitcoin network protocol could damage the Bitcoin network and an investment in the Trust.
The Bitcoin network operates based on an open-source protocol maintained by the core developers and other contributors, largely on the GitHub resource section dedicated to Bitcoin development. As Bitcoin is rewarded solely for mining activity and is not sold to raise capital for the Bitcoin network, and the Bitcoin network protocol itself is made available for free rather than sold or made available subject to licensing or subscription fees and its use does not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating the source code for the Bitcoin network protocol. Consequently, there is a lack of financial incentive for developers to maintain or develop the Bitcoin network and the core developers may lack the resources to adequately address emerging issues with the Bitcoin network protocol. Although the Bitcoin network is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. For example, there have been recent reports that the number of core developers who have the authority to make amendments to the Bitcoin network’s source code in the GitHub repository is relatively small, although there are believed to be a larger number of developers who contribute to the overall development of the source code of the Bitcoin network. Alternatively, some developers may be funded by entities whose interests are at odds with other participants in the Bitcoin network. In addition, a bad actor could also attempt to interfere with the operation of the Bitcoin network by attempting to exercise a malign influence over a core developer. To the extent that material issues arise with the Bitcoin network protocol and the core developers and open-source contributors are unable to address the issues adequately or in a timely manner, the Bitcoin network and an investment in the Trust may be adversely affected.
Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.
Many digital asset networks, including the Bitcoin network, face significant scaling challenges due to the fact that public blockchains generally face a tradeoff between security and scalability. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization generally means a given digital asset network is less susceptible to manipulation or capture. A digital asset network may be limited in the number of transactions it can process by the capabilities of each single fully participating node.
As corresponding increases in throughput lag behind growth in the use of digital asset networks, average fees and settlement times may increase considerably. For example, the Bitcoin network has been, at times, at capacity, which has led to increased transaction fees. Since January 1, 2025, Bitcoin transaction fees have decreased from $1.53 per Bitcoin transaction, on average, to $0.68 per transaction, on average, on December 31, 2025. Increased fees and decreased settlement speeds could preclude certain uses for Bitcoin (e.g., micropayments), and could reduce demand for, and the price of, Bitcoin, which could adversely impact the value of the Shares.
Many developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower levels of security or decentralization (e.g., off-chain payment channels like the Lightning Network, sharding, or off-chain computations). However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of the Bitcoin network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of the Shares.
Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of such digital assets.
The largest Bitcoin wallets are believed to hold, in aggregate, a significant percentage of the Bitcoin in circulation. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant number of Bitcoin, even if they individually only hold a small amount, and it is possible that some of these wallets are controlled by the same person or entity. As a result of this concentration of ownership, large sales or distributions by such holders could have an adverse effect on the market price of Bitcoin.
If the digital asset award for mining blocks and transaction fees for recording transactions on the Bitcoin network are not sufficiently high to incentivize miners, or if certain jurisdictions continue to limit mining activities, miners may cease expanding processing power or demand high transaction fees, which could negatively impact the value of Bitcoin and the value of the Shares.
If the digital asset awards for solving blocks and the transaction fees for recording transactions on the Bitcoin network are not sufficiently high to incentivize miners, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin blockchain could be slowed. A reduction in the processing power expended by miners on the Bitcoin network could increase the likelihood of a malicious actor or botnet obtaining control.
Miners have historically accepted relatively low transaction confirmation fees on most digital asset networks. If miners demand higher transaction fees for recording transactions in the Blockchain or a software upgrade automatically charges fees for all transactions on the Bitcoin network, the cost of using Bitcoin may increase and the marketplace may be reluctant to accept Bitcoin as a means of payment. Alternatively, miners could collude in an anti-competitive manner to reject low transaction fees on the Bitcoin network and force users to pay higher fees, thus reducing the attractiveness of the Bitcoin network. Higher transaction confirmation fees resulting through collusion or otherwise may adversely affect the attractiveness of the Bitcoin network, the value of Bitcoin and the value of the Shares.
If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin network, it may be able to alter the Bitcoin blockchain on which transactions in Bitcoin rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could also control, exclude or modify the ordering of transactions. Although the malicious actor or botnet would not be able to generate new tokens or transactions using such control, it could “double-spend” its own tokens (i.e., spend the same tokens in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Bitcoin blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down the Bitcoin network.
Although there are no known reports of malicious activity on, or control of, the Bitcoin network, it is believed that certain mining pools may have exceeded the 50% threshold on the Bitcoin network since the Bitcoin blockchain’s genesis block was mined in 2009, and others have come close. The possible crossing or near-crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of Bitcoin transactions, and this risk is heightened if over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority. Also, there have been reports that two mining pools recently controlled in excess of 50% of the aggregate mining power on the Bitcoin network and may do so now or in the future. If network participants, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin network will increase, which may adversely affect the value of the Shares. Also, if miners experience financial or other difficulties on a large scale and are unable to participate in mining activities, whether due to a downturn in the Bitcoin market or other factors, the risks of the Bitcoin network becoming more centralized could increase.
A malicious actor may also obtain control over the Bitcoin network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that users and miners accept amendments to the source code proposed by the controlled core developer, other core developers do not counter such amendments, and such amendments enable the malicious exploitation of the Bitcoin network, the risk that a malicious actor may be able to obtain control of the Bitcoin network in this manner exists.
A temporary or permanent “fork” could adversely affect the value of the Shares.
The Bitcoin network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and miners of Bitcoin adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Bitcoin network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Bitcoin running in parallel on separate networks using separate blockchain ledgers, yet lacking interchangeability. For example, in August 2017, Bitcoin “forked” into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin network can process.
Forks may also occur as a network community’s response to a significant security breach. For example, in July 2016, Ethereum “forked” into Ethereum and a new digital asset, Ethereum Classic, as a result of the Ethereum network community’s response to a significant security breach in which an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately $60 million of ETH held by The DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, with the digital asset on that blockchain now referred to as “Ethereum Classic”. Ethereum Classic now trades on several digital asset platforms. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and miners abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of Ethereum and Ethereum Classic.
In addition, many developers have previously initiated hard forks in the Blockchain to launch new digital assets, such as Bitcoin Gold and Bitcoin Diamond. To the extent such digital assets compete with Bitcoin, such competition could impact demand for Bitcoin and could adversely impact the value of the Shares.
Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued Ethereum platforms through at least October 2016. An Ethereum platform announced in July 2016 that it had lost 40,000 Ethereum Classic, worth about $100,000 at that time, as a result of replay attacks. Similar replay attack concerns occurred in connection with the Bitcoin Cash and Bitcoin Satoshi’s Vision networks split in November 2018. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of a digital asset network that retained or attracted less mining power, thereby making digital asset networks that rely on proof-of-work more susceptible to attack.
A hard fork may adversely affect the price of Bitcoin at the time of announcement or adoption. For example, the announcement of a hard fork could lead to increased demand for the prefork digital asset, in anticipation that ownership of the prefork digital asset would entitle holders to a new digital asset following the fork. The increased demand for the prefork digital asset may cause the price of the digital asset to rise. After the hard fork, it is possible the aggregate price of the two versions of the digital asset running in parallel would be less than the price of the digital asset immediately prior to the fork. Furthermore, while the Sponsor will, as permitted by the terms of the Trust Agreement, determine which network is generally accepted as the Bitcoin network and should therefore be considered the appropriate network for the Trust’s purposes, there is no guarantee that the Sponsor will choose the network and the associated digital asset that is ultimately the most valuable fork. Either of these events could therefore adversely impact the value of the Shares.
As another example of the effects of hard forks on digital assets, on September 15, 2022, the Ethereum Network completed its merge, moving from a proof-of-work model to a proof-of-stake model. The Ethereum proof-of-work miners who disagreed with the new consensus mechanism forked the network which resulted in the Ethereum proof-of-work network. Ethereum proof-of-work network was driven by a small but vocal group of miners who wished to hold onto revenue as Ethereum switched to proof-of-stake. The vast majority of token holder votes preferred the new proof-of-stake consensus method. There was no material impact on the Ethereum network as a result of the fork. All ether holders were airdropped Ethereum proof-of-work network tokens as a result of the hard fork. However, not all liquidity providers were able to trade the new token and the Ethereum proof-of-work network token almost immediately lost most of its value.
Protocols may also be cloned. Unlike a fork, which modifies an existing blockchain, and results in two competing networks, each with the same genesis block, a “clone” is a copy of a protocol’s codebase, but results in an entirely new blockchain and new genesis block. Tokens are created solely from the new “clone” network and, in contrast to forks, holders of tokens of the existing network that was cloned do not receive any tokens of the new network. A “clone” results in a competing network that has characteristics substantially similar to the network it was based on, subject to any changes as determined by the developer(s) that initiated the clone.
A future fork in the Bitcoin network could adversely affect the value of the Shares or the ability of the Trust to operate.
Shareholders may not receive the benefits of any forks or “airdrops.”
In addition to forks, a digital asset may become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset announce to holders of another digital asset that such holders will be entitled to claim a certain amount of the new digital asset for free, based on the fact that they hold such other digital asset. For example, in March 2017 the promoters of Stellar Lumens announced that anyone that owned Bitcoin as of June 26, 2017 could claim, until August 27, 2017, a certain amount of Stellar Lumens. Airdrops could create operational security, legal or regulatory, or other risks for the Trust, the Sponsor, the Bitcoin Custodian, Authorized Participants, or other entities.
Shareholders may not receive the benefits of any forks, the Trust may not choose, or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event is uncertain. We refer to the right to receive any such benefit as an “Incidental Right” and any such virtual currency (other than Bitcoin) acquired through an Incidental Right as “IR Virtual Currency.” There are likely to be operational, tax, securities law, regulatory, legal and practical issues that significantly limit, or prevent entirely, Shareholders’ ability to realize a benefit, through their interests in the Trust, from any such IR Virtual Currency. For instance, the Bitcoin Custodian may not agree to provide access to the IR Virtual Currency. In addition, the Sponsor may determine that there is no safe or practical way to custody the IR Virtual Currency, or that trying to do so may pose an unacceptable risk to the Trust’s holdings in Bitcoin, or that the costs of taking possession and/or maintaining ownership of the IR Virtual Currency exceed the benefits of owning the IR Virtual Currency. Additionally, laws, regulation or other factors may prevent Shareholders from benefiting from the IR Virtual Currency even if there is a safe and practical way to custody and secure the IR Virtual Currency. For example, it may be illegal to sell or otherwise dispose of the IR Virtual Currency, or there may not be a suitable market into which the IR Virtual Currency can be sold (immediately after the fork or airdrop, or ever).
The Sponsor may also determine, in consultation with its legal advisors and tax consultants, that the IR Virtual Currency is, or is likely to be deemed, a security under federal or state securities laws or cause the Trust to lose its status as an investment trust classified as a grantor trust. In such a case, the Sponsor will irrevocably abandon, as of any date on which the Trust creates Shares, such IR Virtual Currency if holding it would have an adverse effect on the Trust and it would not be practicable to avoid such effect by disposing of the IR Virtual Currency in a manner that would result in Shareholders receiving more than an insignificant value thereof. In making such a determination, the Sponsor will take into account a number of factors, including the definition of a “security” under Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, SEC v. W.J. Howey Co., 328 U.S. 293 (1946) and the case law interpreting it, as well as reports, orders, press releases, public statements and speeches by the SEC providing guidance on when a digital asset is a “security” for purposes of the federal securities laws.
In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Shares.
In the event of a hard fork of the Bitcoin network, the Sponsor will, as permitted by the terms of the Trust Agreement, use its sole discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Bitcoin network, is generally accepted as the Bitcoin network and should therefore be considered the appropriate network for the Trust’s purposes. The Sponsor will base its determination on whatever factors it deems relevant, including, but not limited to, the Sponsor’s beliefs regarding expectations of the core developers of Bitcoin, users, services, businesses, miners and other constituencies, as well as the actual continued acceptance of, mining power on, and community engagement with, the Bitcoin network, or whatever other factors it deems relevant. There is no guarantee that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor’s decision may adversely affect the value of the Shares as a result. The Sponsor may also disagree with Shareholders, the Bitcoin Custodian, other service providers, the Index Administrator, cryptocurrency platforms, or other market participants on what is generally accepted as Bitcoin and should therefore be considered “Bitcoin” for the Trust’s purposes, which may also adversely affect the value of the Shares as a result.
A hard fork could change the source code to the Bitcoin network, including the 21 million Bitcoin supply cap.
In principle, a hard fork could change the source code for the Bitcoin network, including the source code which limits the supply of Bitcoin to 21 million. Although many observers believe this is unlikely at present, there is no guarantee that the current 21 million supply cap for outstanding Bitcoin, which is estimated to be reached by approximately the year 2140, will not be changed. If a hard fork changing the 21 million supply cap is widely adopted, the limit on the supply of Bitcoin could be lifted, which could have an adverse impact on the value of Bitcoin and the value of the Shares.
Any name change and any associated rebranding initiative by the core developers, users or miners of Bitcoin or the Bitcoin network may not be favorably received by the digital asset community, which could negatively impact the value of Bitcoin and the value of the Shares.
From time to time, digital assets may undergo name changes and associated rebranding initiatives. For example, Bitcoin Cash may sometimes be referred to as Bitcoin ABC in an effort to differentiate itself from any Bitcoin Cash hard forks, such as Bitcoin Satoshi’s Vision, and in the third quarter of 2018, the team behind Zen rebranded and changed the name of ZenCash to “Horizen.” The Sponsor cannot predict the impact of any name change and any associated rebranding initiative on Bitcoin. After a name change and an associated rebranding initiative, a digital asset may not be able to achieve or maintain brand name recognition or status that is comparable to the recognition and status previously enjoyed by such digital asset. The failure of any name change and any associated rebranding initiative by a digital asset may result in such digital asset not realizing some or all of the anticipated benefits contemplated by the name change and associated rebranding initiative, and could negatively impact the value of Bitcoin and the value of the Shares.
Risk
Factors Related to the Bitcoin
Digital Asset Markets
The value of the Shares relates directly to the value of Bitcoin, the value of which may be highly volatile and subject to fluctuations due to a number of factors.
The value of the Shares relates directly to the value of the Bitcoin held by the Trust and fluctuations in the price of Bitcoin could adversely affect the value of the Shares. The market price of Bitcoin may be highly volatile, and subject to a number of factors, including:
Although returns from investing in Bitcoin have at times diverged from those associated with other asset classes to a greater or lesser extent, there can be no assurance that there will be any such divergence in the future, either generally or with respect to any particular asset class, or that price movements will not be correlated. In addition, there is no assurance that Bitcoin will maintain its value in the long, intermediate, short, or any other term. In the event that the price of Bitcoin declines, the Sponsor expects the value of the Shares to decline proportionately.
The price of Bitcoin as represented by the Index or other pricing source used by the Trust may also be subject to momentum pricing due to speculation regarding future appreciation in value, leading to greater volatility that could adversely affect the value of the Shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. The Sponsor believes that momentum pricing of Bitcoin has resulted, and may continue to result, in speculation regarding future appreciation in the value of Bitcoin, inflating and making the Index more volatile. As a result, Bitcoin may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in the Index or other pricing source used by the Trust and could adversely affect the value of the Shares.
Because the Trust holds only Bitcoin and cash, an investment in the Trust may be more volatile than an investment in a more broadly diversified portfolio.
The Trust holds only Bitcoin and cash. As a result, the Trust’s holdings are not diversified. Accordingly, the Trust’s NAV may be more volatile than another investment vehicle with a more broadly diversified portfolio and may fluctuate substantially over short or long periods of time. Fluctuations in the price of Bitcoin are expected to have a direct impact on the value of the Shares.
An investment in the Trust may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons financially able to maintain their investment and who can bear the risk of total loss associated with an investment in the Trust. Investors should review closely the objective and strategy of the Trust and redemption rights, as discussed herein, and familiarize themselves with the risks associated with an investment in the Trust.
Management's Discussion & Analysis (MD&A)
New heading “Trading and Other Risks”
Removed heading “Critical Accounting Policies and Estimates”
Removed heading “Investment Transactions and Revenue Recognition”
Removed heading “Principal Market and Fair Value Determination”
Removed heading “Investment Company Considerations”
Removed heading “Review of Financial Results (audited)”
Removed heading “Selected Operating Data”
Largest changes
“The Trust holds one type of investment - Bitcoin. To avoid having to pre-fund purchases or sales of Bitcoin in connection with cash creations and redemptions and sales of Bitcoin to pay the Management Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable, the Trust may acquire Trade Credits from the Lender on a short-term basis pursuant to the Coinbase Trade Financing Agreement (the “Trade Financing Agreement”). The Trust must fully repay to the Lender the Trade Credits extended during a Defined Interval by the Settlement Deadline for that Defined Interval. …”see in full comparison
“Risky loan practices, overleveraged positions, undercollateralized stablecoins, and flat-out fraud plagued the crypto industry in 2022, likely contributing to increased volatility and price depreciation. As a result, several crypto companies entered bankruptcy during 2022, shaking investor confidence in the industry. 2022 saw two major spikes in Bitcoin volatility, one about halfway through the year and the other near year end. The first peak in volatility occurred on June 24, 2022, when the 30-day annualized price volatility hit 94.53%. …”see in full comparison
“The Units are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. However, an investment in the Units may operate and perform differently over time, and at any given time, than an investment directly in Bitcoin due to such factors as Trust fees and expenses, the quantity of Units available for trading, and the relative liquidity, and differences in the markets trading Bitcoin from the markets trading the Units (e.g., hours of operation, marketplace rules, clearance and settlement, market participants). …”see in full comparison
Full comparison: every changed paragraph (35)
The
following discussion
and analysis of our financial condition and results of operations should be read together with our audited financial statements
and related notes included elsewhere in this Annual Report, which have been prepared in accordance with generally accepted accounting
principles in the United States (“U.S. GAAP”).GAAP. The following discussion
may contain forward-looking statements based
on assumptions we believe to be reasonable. Our actual results could differ materially from
those discussed in these forward-looking
statements. Factors that could cause or contribute to these differences include, but are not
limited to, those set forth under
Part I, Item 1A. “Risk Factors” instarting on page 31 of this Annual Report.
Trust Overview
The
Trust is a passive investment vehicle, and its assets will not be actively managed. As a result, it will not engage in any activities
designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Bitcoins. The investment objective
of the Trust is for the Units to reflect the performance of Bitcoin as measured by reference to Coin Metrics CMBI Bitcoin Index
(the “Index”), less the aggregate Trust expenses and other liabilities. To date, the Trust has not met its investment
objective.
The
Units are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. However, an investment
in the Units may operate and perform differently over time, and at any given time, than an investment directly in Bitcoin due to
such factors as Trust fees and expenses, the quantity of Units available for trading, and the relative liquidity, and differences
in the markets trading Bitcoin from the markets trading the Units (e.g., hours of operation, marketplace rules, clearance and settlement,
market participants). Although the Units will not be the exact equivalent of a direct investment in Bitcoin, they provide investors
with an alternative that constitutes a relatively cost-effective way to participate in Bitcoin markets through the securities market.
The Units have been quoted on OTC Markets since February 12, 2021, and on OTCQX under the symbol “OBTC” since February
26, 2021, and to date have not met their investment objective.
At
this time, the Trust is not operating a redemption program for Units and therefore Units are not redeemable by the Trust. In addition,
the Trust may halt issuances of Units for extended periods of time. As a result, the value of the Units of the Trust may not approximate, and when
traded on any secondary market, the Units may trade at a substantial premium over, or discount to, the Trust’s NAV per Unit.
Critical Accounting Policies and Estimates
Investment Transactions and Revenue
Recognition
The
Trust considers investment transactions to be the receipt of Bitcoin for Units creations and the delivery of Bitcoin for Units
redemptions or for payment of expenses in Bitcoin. At this time, the Trust is not accepting redemption requests from unitholders.
The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as the net change in
unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using a first in first out method.
Realized gains and losses are recognized in connection with transactions including settling obligations for the Management Fee
other expenses in Bitcoin.
Principal Market
and Fair Value Determination
To
determine which Bitcoin market will serve as the Trust’s principal market (or in the absence of a principal market, the most
advantageous market) for purposes of calculating the Trust’s NAV, the Trust follows FASB ASC 820-10, which outlines the application
of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for Bitcoin in a current sale,
which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume
that Bitcoin is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous
market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent,
knowledgeable and willing and able to transact.
The Trust purchases Bitcoin
directly from various counterparties, such as Galaxy Digital, Jane Street and Cumberland DRW LLC, and does not itself transact
in any Bitcoin markets. The purchase price of Bitcoin from our counterparties may vary significantly. The Trust looks to these
counterparties when assessing entity-specific and market-based volume and the level of activity in the Bitcoin markets. The Trust
determines the value of Bitcoin at any given time by reference to the market price of Bitcoin traded on Coinbase Pro, the Trust’s
principal market, as determined at 4:00 p.m., New York time on each Business Day (the “Bitcoin Market Price”). The
Trust evaluates its principal market selection (or in the absence of a principal market the most advantageous market) at least
annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Bitcoin market’s trading
volume and level of activity in the trailing twelve months, (ii) if any Bitcoin markets have developed that the Trust has access
to, or (iii) if recent changes to a Bitcoin market’s price stability have occurred that would materially impact the selection
of the principal market and necessitate a change in the Trust’s determination of its principal market. The Trust does not
anticipate changing its principal market more frequently than annually, in connection with its annual evaluation of its principal
market selection and annual financial audit. Each annual evaluation will take into account the findings from the Trust’s
quarterly reviews.
The cost basis of a Trust
investment in Bitcoin recorded by the Trust for financial reporting purposes is the fair value of the Bitcoin at the time of contribution
to the Trust. The Bitcoin cost basis recorded by the Trust may differ from the value of the proceeds collected by the Sponsor from
the sale of the corresponding Units to investors.
Investment Company Considerations
The
Trust is an investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC
Topic 946, Financial Services – Investment Companies. The Trust uses fair value as its method of accounting for Bitcoin
in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment
company under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported
amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences
could be material.
Review of Financial Results (audited)
Financial
Highlights for YearYears Ended
December 31, 20222025 and 20212024
Net
realized and unrealized
loss on investment in Bitcoin for the year ended December 31, 20222025 was $82,539,061,$11,315,457 which includes
a realized gain of $834,003
$31,706,586 on the transfer of BitcoinsBitcoin to pay the Management FeeFee, redemptions and other expenses and net change in unrealized
depreciation on investment
in Bitcoin of $83,373,064.$43,022,043. Net realized and unrealized loss on investment in Bitcoin for the yearperiod was
driven by Bitcoin price depreciation
from $45,867.86$93,393 per Bitcoin as of December 31, 20212024, to $16,561.21$87,316 per Bitcoin as of December 31, 2022.
2025. Net decrease in net assets
resulting from operations was $83,658,388$13,448,292 for the year ended December 31, 2022,2025, which consisted of
the net realized gain and unrealized
loss depreciation on investment in Bitcoin, the Management Fee of $388,890$954,927 and other expenses of $730,437.
$1,177,908. Net assets decreased to $46,014,780
for$136,695,615 the year endedon December 31, 2022,2025, a 65%24% decrease for the year.period. The decrease in net assets
resulted from the aforementioned
Bitcoin price depreciation, andthe Trust’s expenses of $1,119,327$2,132,835 and capital redemptions of
$30,635,576 for the year.period.
Risky loan practices, overleveraged
positions, undercollateralized stablecoins, and flat-out fraud plagued the crypto industry in 2022, likely contributing to increased
volatility and price depreciation. As a result, several crypto companies entered bankruptcy during 2022, shaking investor confidence
in the industry. 2022 saw two major spikes in Bitcoin volatility, one about halfway through the year and the other near year end.
The first peak in volatility occurred on June 24, 2022, when the 30-day annualized price volatility hit 94.53%. This coincided
with major market events such as Terra’s stablecoin (UST) and native asset (LUNA) losing approximately $18 billion of value
as well as hedge fund, Three Arrows Capital, and crypto-lending companies, Voyager and Celsius, filing for bankruptcy. The second
volatility peak occurred on November 22, 2022, when the 30-day annualized price volatility reached 80.18%. This spike in volatility
corresponded with the bankruptcies of the world’s second largest crypto exchange, FTX, and their trading arm, Alameda Research,
along with crypto-lender, BlockFi.
Net
realized and unrealized
gain on investment in Bitcoin for the year ended December 31, 20212024 was $16,870,167$120,959,062 which includes a realized
gain of $12,335$52,607,095 on
the transfer of BitcoinsBitcoin to pay the Management FeeFee, redemptions and other expenses and net change in unrealized appreciation
on investment in
Bitcoin of $16,857,832.$68,351,967. Net realized and unrealized gain on investment in Bitcoin for the yearperiod was driven by Bitcoin
price appreciation
from $29,026.66$42,014 per Bitcoin as of December 31, 20202023, to $45,867.86$93,393 per Bitcoin as of December 31, 2021.2024. Net increase in
net assets
resulting from operations was $15,939,190$119,372,537 for the year ended December 31, 2021,2024, which consisted of the net realized and unrealized
gain on investment in Bitcoin, less the Management Fee of $605,731$678,610 and other expenses of $325,246, net of waivers.$907,915. Net assets increased
to $129,673,168 $180,779,483
on December 31, 2021,2024, a 189%57% increase for the year.period. The increase in net assets resulted from the aforementioned
Bitcoin price appreciation and capital contribution of approximately 1,299.49 Bitcoin with a value of $68,827,296 to the Trust
in connection with Units issuance during the period, which was partially offset by the Trust’s Net expenses of $930,977$1,586,525 for
the year.period and capital redemption of $54,057,318 for the period.
The
Management Fee is paid in U.S. dollars. When
selling BitcoinsBitcoin to pay expenses, the Sponsor endeavoursendeavors to sell the exact number of Bitcoins Bitcoin
needed to pay expenses in order to
minimize the Trust’s holdings of assets other than Bitcoin. As a consequence, the Sponsor expects
that the Trust will not
record any cash flow from its operations and that its cash balance will be zero at the end of each reporting
period. The prices
of digital assets, specifically Bitcoin, have experienced substantial volatility, which may reflect “bubble”
type volatility,
meaning that high or low prices may have little or no relationship to identifiable market forces, may be subject to
rapidly changing
investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors,
manipulation, manipulation,
and media reporting. Bitcoin may have value based on various factors, including their acceptance as a means of exchange
by consumers
and others, scarcity, and market demand.
In
exchange for the Management Fee, the Sponsor has agreed to bearpay theall routine operational,and ordinary administrative and other ordinary fees
andoperating expenses incurredof bythe
Trust including the Trust.fees of the Trustee, the Trust Administrator, Fund Accountant, Transfer Agent, the Custodians’ Fees,
Listing Exchange fees, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and ordinary
legal fees and expenses. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely
to result in
material changes to its liquidity needs.
Selected Operating Data
As
movements in the price of Bitcoins willBitcoin directly affectaffects the price of the Units,Shares, investors should understand recent movements in
the price
of Bitcoin. Investors, however, should also be aware that past movements in the Bitcoin price are not indicators of future movements.
movements. Movements may be influenced by various factors, including, but not limited to, government regulation,regulation and security breaches experienced
experienced by service providers, as well as political and economic uncertainties around the world.
The following chart illustrates the historical movements in the NAV of the Trust from the beginning of the Trust’s operations on January 3, 2019, to December 31, 2025. Prior to trading on the Listing Exchange on December 19, 2025, NAV was determined based on the estimated fair market value price for Bitcoin, reflecting the execution price of Bitcoin on its principal market as determined by the Trust, which uses pricing methodology designed in accordance with ASC 820-10. From December 19, 2025, through December 31, 2025, NAV is determined based on the Index.
The
following chart illustrates the movements in the NAV and the Bitcoin Market Price (referred to in the chart as “Market Price”)
from the beginning of the Trust’s operations on January 3, 2019 to December 31, 2022.
The
table below illustrates
the movements in the Bitcoin Market Price since the beginning of the Trust’s operations on January 3, 2019.2019
through December 18, 2025. Beginning on December 19, 2025, the performance of Bitcoin is measured by reference to the Index. Since the
beginning beginning
of the Trust’s operations tothrough December 31,18, 20222025, the Bitcoin Market Price has ranged from $3,358.67 to $67,371.70, $125,492.00,
with the
straight average being $23,558.64.$41,482.46. From December 19, 2025 through December 31, 2025, the Index price has ranged from $87,218.24
to $88,121.12. The Sponsor has not observed a material difference between the Bitcoin Market PricePrice, the Index price and average prices
prices from the constituent Bitcoin exchanges individually or as a group.
The
Trust’s Units
haveShares beenwere quoted on OTC Markets sincefrom February 12, 2021, and on OTCQX since February 26, 2021 under the symbol “OBTC”. from February 26, 2021, through
TheDecember 18, 2025. On December 19, 2025, the Trust’s Shares began trading on the Listing Exchange. Historically, the price of the Units
Shares as quoted on OTCQX (and OTC Markets) has varied significantly from the NAV per Unit.Share. From February 12, 2021
2021, to December 31,18, 2022, 2025,
the maximum premium of the closing price of the UnitsShares quoted on OTCQX (and OTC Markets) over the value of
the Trust’s NAV per
Share Unitby reference to the Bitcoin Market Price was approximately 240% and the average daily discount sincewas approximately -11.65%. As of
December 31, 2025, the UnitsTrust’s wereShares firsthave been traded on OTC Markets
on February 12, 2021 was approximately 8%. As of December 31, 2022, the Trust’sListing Units were quoted on OTCQXExchange at a discount
premium of approximately 40%0.14% to the Trust’s
NAV per Unit.Share.
TheWhile
quoted on OTCQX and OTC Markets, the historical premium of
the closing price of the Units quoted on OTCQX and OTC MarketsShares as compared with the NAV per UnitShare has varied,
from a high of 240%
240.16% on February 16, 20212021, (closing price $56.39 per UnitShare on OTCQX (and OTC Markets) and NAV per UnitShare $16.58) to
a low (i.e., discount) of 46%-46.15% on
November 18, 2022 (closing price $3 per UnitShare on OTCQX (and OTC Markets) and NAV per UnitShare $5.56). The historical premiums and discounts
at times reflect a material deviation from the Bitcoin Market Price.
The
following table sets
out the range of high and low closing prices for the UnitsShares as reported by OTCQX, the Trust’s NAV per Unit and the Trust’sShare
Bitcoin Holdings per Unit for the period from February 12, 20212021, to December 31,18, 2022.2025.
Market Risk
See “Section 1A—Risk Factors” for a discussion of market risk.
Credit Risk
The Trust holds one type of investment - Bitcoin. To avoid having to pre-fund purchases or sales of Bitcoin in connection with cash creations and redemptions and sales of Bitcoin to pay the Management Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable, the Trust may acquire Trade Credits from the Lender on a short-term basis pursuant to the Coinbase Trade Financing Agreement (the “Trade Financing Agreement”). The Trust must fully repay to the Lender the Trade Credits extended during a Defined Interval by the Settlement Deadline for that Defined Interval. “Defined Interval” means a twenty-four (24) hour period starting at 6:00 a.m. ET (or such other time as may be notified by the Lender to the Trust from time to time) on any day that the Lender has extended Trade Credit to the Trust. The “Settlement Deadline” shall mean 6:00 p.m. ET on the calendar day immediately following the start of a Defined Interval. The Trust is permitted to repay the Trade Credits at any time during the Defined Interval. Failure of the Trust to fully repay the Trade Credits by the Settlement Deadline may result in an Event of Default (as such term is defined in the agreement). The Trust must repay the Lender with the same type of asset that the Lender provided in extending the applicable Trade Credit. The Trust’s repayment obligation shall be satisfied only when the Lender receives good funds for cash Trade Credits or Bitcoin for Trade Credits. All cash repayments must be made to the Lender in good funds by the Settlement Deadline, regardless of whether the Federal Reserve wire transfer system is open for business.
Trading and Other Risks
See “Section 1A—Risk Factors” for a discussion of trading and other related risks.
What changed in the latest 10-Q
Risk Factors
A summary of the principal factors that make an investment in the Shares speculative or risky are contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 31, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Net realized and unrealized gain on investment in Bitcoin for the three months ended June 30, 2025 was $48,793,642 which includes a realized gain of $396,190 on the transfer of Bitcoin to pay the Management Fee and other expenses and net change in unrealized appreciation on investment in Bitcoin of $48,397,452. Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $82,445 per Bitcoin as of March 31, 2025 to $107,754 per Bitcoin as of June 30, 2025. …”see in full comparison
“Net realized and unrealized gain on investment in Bitcoin for the six months ended June 30, 2025 was $27,636,431 which includes a realized gain of $995,469 on the transfer of Bitcoin to pay the Management Fee and other expenses and net change in unrealized appreciation on investment in Bitcoin of $26,640,962. Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $93,393 per Bitcoin as of December 31, 2024 to $107,754 per Bitcoin as of June 30, 2025. …”see in full comparison
Net realized and unrealized loss on investment in Bitcoin for thesee in full comparisonthreesix months endedMarchJune31,30,2025,2026, was$21,157,211$30,363,291, which includes a realized gain of$599,279$30,997,591 on the transfer of Bitcoin to pay the fee owed to the Sponsor (the “ManagementFee, redemptionsFee”) andother expensesredemptions and net change in unrealized depreciation on investment in Bitcoin of$21,756,490.$61,360,882. Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from$93,393$87,316 per Bitcoin as of December 31,2024,2025, to$82,445$58,605 per Bitcoin as ofMarchJune31,30,2025.2026. Net decrease in net assets resulting from operations was$21,720,710$30,554,694 for thethreesix months endedMarchJune31,30,2025,2026, which consisted of the net realized gain and net unrealized depreciation on investment in Bitcoin,lessand the Management Fee of$218,107 and other expenses of $345,392.$191,403. Net assets decreased to$159,058,773 on$55,366,014Marchas31,of2025,June 30, 2026, a12.01%59.5% decrease for the period. The decrease in net assets resulted from the aforementioned Bitcoin price depreciation,andthe Trust’s expenses of$563,499$191,403 and capital redemptions of $50,774,907 for the period.
Net realized and unrealized loss on investment in Bitcoin for the three months endedsee in full comparisonMarchJune31,30, 2026, was$21,646,683,$8,716,608, which includes a realized gain of$30,979,300$18,291 on the transfer of Bitcoin to pay the fee owed to the Sponsor (the “Management Fee”) andredemptions andnet change in unrealized depreciation on investment in Bitcoin of$52,625,983.$8,734,899. Net realized and unrealized loss on investment in Bitcoin for the period was driven by Bitcoin price depreciation from$87,316 per Bitcoin as of December 31, 2025, to$67,832 per Bitcoin as of March 31, 2026, to $58,605 per Bitcoin as of June 30, 2026. Net decrease in net assets resulting from operations was$21,755,174$8,799,520 for the three months endedMarchJune31,30, 2026, which consisted of the net realized gaingainand net unrealized depreciation on investment in Bitcoin, and the Management Fee of$108,491.$82,912. Net assets decreased to$64,165,534$55,366,014 asonofMarch 31,June 30, 2026, a53.1%13.7% decrease for the period. The decrease in net assets resulted from the aforementioned Bitcoin pricedepreciation,depreciation and the Trust’s expenses of$108,491 and capital redemptions of $50,774,907$82,912 for the period.
The following discussion and analysissee in full comparisonwaswere prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the Trust’s financial condition as ofMarchJune31,30, 2026, and its results of operations for the threethreemonths and six months endedMarchJune31,30, 2026, andMarchJune31,30, 2025. It should be read in conjunction with theauditedunaudited financial statements and related notes thereto contained in this QuarterlyReport.Report and the financial statements and related notes thereto contained in the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The Trust creates and redeems Shares only in blocks of 10,000 or integral multiples thereof (each, a “Basket”), based on the quantity of Bitcoin attributable to each Share (net of accrued but unpaid Management Fee and any accrued but unpaid expenses or liabilities). These transactions take place in exchange for Bitcoin or cash. Baskets are offered continuously at the index-based net asset value (“Index-based NAV”) per Share for 10,000 Shares. For purposes of creating and redeeming Baskets, the Trust uses an Index-based NAV calculated based on the value of Bitcoin as reflected by the Index. The amount of cash necessary for the creation of a Basket changes from day to day based on the Basket Amount. As ofsee in full comparisonMarchJune31,30, 2026, a Basket required delivery of3.216935663.21276675 Bitcoin or$218,210.41.$188,286.
Full comparison: every changed paragraph (11)
The
following discussion and analysis waswere prepared to supplement information contained in the accompanying financial statements and is intended
to explain certain items regarding the Trust’s financial condition as of MarchJune 31,30, 2026, and its results of operations for the three
threemonths and six months ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025. It should be read in conjunction with the auditedunaudited financial statements
and related
notes thereto contained in this Quarterly Report.Report and the financial statements and related notes thereto contained in the
Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Financial
Highlights for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025
Net
realized and unrealized loss on investment in Bitcoin for the three months ended MarchJune 31,30, 2026, was $21,646,683,$8,716,608, which includes a realized
gain of $30,979,300$18,291 on the transfer of Bitcoin to pay the fee owed to the Sponsor (the “Management Fee”) and redemptions and net change in unrealized
depreciation on
investment in Bitcoin of $52,625,983.$8,734,899. Net realized and unrealized loss on investment in Bitcoin for the period was driven
by Bitcoin
price depreciation from $87,316 per Bitcoin as of December 31, 2025, to $67,832 per Bitcoin as of March 31, 2026, to $58,605 per Bitcoin as of June 30, 2026. Net decrease
in net
assets resulting from operations was $21,755,174$8,799,520 for the three months ended MarchJune 31,30, 2026, which consisted of the net realized
gain gain
and net unrealized depreciation on investment in Bitcoin, and the Management Fee of $108,491.$82,912. Net assets decreased to $64,165,534$55,366,014
as onof March
31,June 30, 2026, a 53.1%13.7% decrease for the period. The decrease in net assets resulted from the aforementioned Bitcoin price depreciation,depreciation
and the
Trust’s expenses of $108,491 and capital redemptions of $50,774,907$82,912 for the period.
Net
realized and unrealized loss on investment in Bitcoin for the threesix months ended MarchJune 31,30, 2025,2026, was $21,157,211$30,363,291, which includes a realized
gain of $599,279$30,997,591 on the transfer of Bitcoin to pay the fee owed to the Sponsor (the “Management Fee, redemptionsFee”) and other expenses redemptions
and net change in unrealized depreciation
on investment in Bitcoin of $21,756,490.$61,360,882. Net realized and unrealized loss on investment in
Bitcoin for the period was driven by Bitcoin
price depreciation from $93,393$87,316 per Bitcoin as of December 31, 2024,2025, to $82,445$58,605 per Bitcoin
as of MarchJune 31,30, 2025.2026. Net decrease in net
assets resulting from operations was $21,720,710$30,554,694 for the threesix months ended MarchJune 31,30, 2025,2026, which
consisted of the net realized gain and net unrealized
depreciation on investment in Bitcoin, lessand the Management Fee of $218,107 and other expenses of $345,392.$191,403. Net
assets decreased to $159,058,773
on$55,366,014 Marchas 31,of 2025,June 30, 2026, a 12.01%59.5% decrease for the period. The decrease in net assets resulted from the aforementioned
Bitcoin price depreciation,
and the Trust’s expenses of $563,499$191,403 and capital redemptions of $50,774,907 for the period.
Net realized and unrealized gain on investment in Bitcoin for the three months ended June 30, 2025 was $48,793,642 which includes a realized gain of $396,190 on the transfer of Bitcoin to pay the Management Fee and other expenses and net change in unrealized appreciation on investment in Bitcoin of $48,397,452. Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $82,445 per Bitcoin as of March 31, 2025 to $107,754 per Bitcoin as of June 30, 2025. Net increase in net assets resulting from operations was $48,316,577 for the three months ended June 30, 2025, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Management Fee of $232,290 and other expenses of $244,775. Net assets increased to $207,375,350 at June 30, 2025, a 30% increase for the period. The increase in net assets resulted from the aforementioned Bitcoin price appreciation partially offset by the Trust’s expenses of $477,065 for the period.
Net realized and unrealized gain on investment in Bitcoin for the six months ended June 30, 2025 was $27,636,431 which includes a realized gain of $995,469 on the transfer of Bitcoin to pay the Management Fee and other expenses and net change in unrealized appreciation on investment in Bitcoin of $26,640,962. Net realized and unrealized gain on investment in Bitcoin for the period was driven by Bitcoin price appreciation from $93,393 per Bitcoin as of December 31, 2024 to $107,754 per Bitcoin as of June 30, 2025. Net increase in net assets resulting from operations was $26,595,867 for the six months ended June 30, 2025, which consisted of the net realized and unrealized gain on investment in Bitcoin, less the Management Fee of $450,397 and other expenses of $590,167. Net assets increased to $207,375,350 at June 30, 2025, a 15% increase for the period. The increase in net assets resulted from the aforementioned Bitcoin price appreciation partially offset by the Trust’s expenses of $1,040,564 for the period.
The
Trust’s net asset value (“NAV”) divided by the number of outstanding Shares (“NAV per Share”) is calculated
by multiplying the number of
Bitcoin held by the Trust by the Index for such day, adding any additional receivables and subtracting the
accrued but unpaid
expenses and liabilities of the Trust. The Trust’s NAV per Share is calculated by dividing the Trust’s
NAV by the number
of Shares then outstanding. U.S. Bancorp Fund Services, LLC (d/b/a U.S. Bank Global Fund Services) (the “Trust
Administrator”) determines the price of the Trust’s Bitcoin by reference to the Index,
which is published between 4:00 p.m.
and 4:30 p.m., New York time, on every calendar day. The methodology used to calculate the
Index price to value Bitcoin in determining
the NAV of the Trust may not be deemed consistent with GAAP. As of MarchJune 31,30, 2026, the
Trust’s NAV per Share was $21.82$18.83 based on
the Index.
The
Trust creates and redeems Shares only in blocks of 10,000 or integral multiples thereof (each, a “Basket”), based on the
quantity of Bitcoin attributable to each Share (net of accrued but unpaid Management Fee and any accrued but unpaid expenses or liabilities).
These transactions take place in exchange for Bitcoin or cash. Baskets are offered continuously at the index-based net asset value (“Index-based
NAV”) per Share for 10,000 Shares. For purposes of creating and redeeming Baskets, the Trust uses an Index-based NAV calculated
based on the value of Bitcoin as reflected by the Index. The amount of cash necessary for the creation of a Basket changes from day to
day based on the Basket Amount. As of MarchJune 31,30, 2026, a Basket required delivery of 3.216935663.21276675 Bitcoin or $218,210.41.$188,286.
The
following chart illustrates the movements in the NAV of the Trust from the beginning of the Trust’s operations forthrough the three monthsperiod
ended MarchJune 31,30, 2026.
The
table below illustrates the movements in the Bitcoin Market Price for the threesix months ended MarchJune 31,30, 2026.
The
Management Fee is paid in U.S. dollars. When selling Bitcoin to pay expenses, the Sponsor endeavors to sell the exact numberamount of Bitcoin
needed to pay expenses in order to minimize the Trust’s holdings of assets other than Bitcoin. As a consequence, the Sponsor expects
that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting
period. The prices of digital assets, specifically Bitcoin, have experienced substantial volatility, which may reflect “bubble”
type volatility, meaning that high or low prices may have little or no relationship to identifiable market forces, may be subject to
rapidly changing investor sentiment, and may be influenced by factors such as technology, regulatory void or changes, fraudulent actors,
manipulation, and media reporting. Bitcoin may have value based on various factors, including their acceptance as a means of exchange
by consumers and others, scarcity, and market demand.
OBTC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding OBTC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 37,517 | $818.7K | — | Sold out |