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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-03-29 · 194 added, 89 removed, 77 unchanged (79% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition

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Overview / Introduction

For the fiscal period ended December 31, 2023, the Trust had no operations

other than a sale to WisdomTree, Inc., the parent of the Sponsor, of 1,000 shares at $50 per share for total proceeds of $50,000.

to December 31, 2023, on January 8, 2024, WisdomTree, Inc.

purchased an additional 49,000 shares at $50 per share for total proceeds

of $2,450,000.

Total proceeds to the Trust from these initial sales of the shares were $2,500,000.

On January 11, 2024, the Shares commenced

trading on Cboe BZX Exchange, Inc.

under the ticker symbol “BTCW”.

Performance Summary

There is no performance history prior to the beginning of trading

on January 11, 2024.

WisdomTree Bitcoin Fund (the “Trust”) is an exchange-traded

fund that issues common shares of beneficial interest that are listed on the Cboe BZX Exchange, Inc.

and which began trading under the

ticker symbol “BTCW” on January 11, 2024.

The Trust is a Delaware statutory trust, formed on March 8, 2021, pursuant to the

Delaware Statutory Trust Act.

The Trust operates pursuant to the Trust Agreement.

The Trust offers Shares only to Authorized Participants

in one or more blocks of 5,000 Shares based on the quantity of bitcoin attributable to each Share of the Trust.

Each Share represents

a fractional undivided beneficial interest in the net assets of the Trust.

The Trust’s investment objective is to gain exposure to the price

of bitcoin, less expenses and liabilities of the Trust’s operations.

In seeking to achieve its investment objective, the Trust will

hold bitcoin and will value its Shares daily based on the CME CF Bitcoin Reference Rate - New York Variant (the “Reference Rate”).

Net Asset Value

The Trust’s NAV per Share is calculated

The Trust’s NAV per Share is calculated by:

· taking the current market value of its total assets including, but not limited to, all bitcoin, cash or other assets;

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· dividing that total by the total number of outstanding Shares.

The methodology of the Reference Rate used

to value bitcoin for purposes of calculating NAV Per Share may not be deemed consistent with generally accepted accounting principles

To the extent the methodology used to calculate the Reference Rate is deemed not to be consistent with

GAAP, the Trust will utilize an alternative GAAP-consistent pricing source for purposes of the Trust’s periodic financial statements,

as further discussed below.

The Trust Administrator calculates the NAV

of the Trust once each Exchange trading day.

The methodology of the Reference Rate used to value bitcoin for purposes

of calculating NAV Per Share may not be deemed consistent with generally accepted accounting principles in the U.S.

To the extent the methodology used to calculate the Reference Rate is deemed not to be consistent with GAAP, the Trust will utilize an

alternative GAAP-consistent pricing source for purposes of the Trust’s periodic financial statements, as further discussed below.

The Trust Administrator calculates the NAV of the Trust once each Exchange

The NAV for a normal trading day will be released after 4:00 p.m.

Trading during the

core trading session on the Exchange typically closes at 4:00 p.m.

However, NAVs are not officially struck until later in the day

(often by 5:30 p.m.

EST and almost always by 8:00 p.m.

The Sponsor anticipates that the Reference

Rate will be reflective of a reasonable valuation of the average spot price of bitcoin.

However, in the event the Reference Rate was not

available or determined by the Sponsor to not be reliable, the Sponsor would “fair value” the Trust’s bitcoin holdings.

The Sponsor does not anticipate that the need to “fair value” bitcoin will be a common occurrence.

The Sponsor reserves the

right to replace the Reference Rate with another valuation methodology which it believes will accurately track the price of bitcoin.

the Sponsor makes the decision to materially change the valuation methodology or replace either the Reference Rate or the Benchmark Administrator,

the Sponsor will notify Shareholders via a posting on the Trust’s website, prospectus supplement, post-effective amendment, through

a current report on Form 8-K or in the Trust’s annual or quarterly reports.

The Sponsor will publish the NAV, NAV per

Share and the Trust’s bitcoin holdings at www.wisdomtree.com/investments after their determination and availability.

Trading during the core trading session on the Exchange

typically closes at 4:00 p.m.

However, NAVs are not officially struck until later in the day (often by 5:30 p.m.

ET and almost always

The Sponsor believes that the Reference Rate will be reflective of

a reasonable valuation of the average spot price of bitcoin.

However, in the event the Reference Rate was not available or determined

by the Sponsor to not be reliable, the Sponsor would “fair value” the Trust’s bitcoin holdings.

The Sponsor does not

anticipate that the need to “fair value” bitcoin will be a common occurrence.

The Sponsor reserves the right to replace the

Reference Rate with another valuation methodology which it believes will accurately track the price of bitcoin.

If the Sponsor makes the

decision to materially change the valuation methodology or replace either the Reference Rate or the Benchmark Administrator, the Sponsor

will notify Shareholders via a posting on the Trust’s website, prospectus supplement, post-effective amendment, through a current

report on Form 8-K or in the Trust’s annual or quarterly reports.

The Sponsor publishes the NAV, NAV per Share and the Trust’s

bitcoin holdings at www.wisdomtree.com/investments after their determination and availability.

Reference Rate data and the description

of the Reference Rate are based on information made publicly available by the Benchmark Administrator on its website at https://www.cfbenchmarks.com.

As of December 31, 2024 (the last business day), the Trust had a net

closing balance of 3,862.4890 bitcoins with a value of $362,032,407 based on the Reference Rate Price of $93,730.35, which is calculated

pursuant to non-GAAP methodology.

As of December 31, 2024, the total market value of the Trust's bitcoin was $360,596,442, based on the

price of a bitcoin in the principal market of $93,358.58.

For the twelve-month period ended December 31, 2024, the Trust determined that

Coinbase was its principal market.

The following chart illustrates the movement in the Market Price per

Share and the Trust's NAV per Share from January 11, 2024, the date the Trust was listed on the Exchange, to December 31, 2024.

The table below illustrates the high and low

price of bitcoin as represented by the Reference Rate and the principal market during the period ended December 31, 2024.

End of Period

Reference Rate

data and the description of the Reference Rate are based on information made publicly available by the Benchmark Administrator on its

website at https://www.cfbenchmarks.com.

For the twelve-month period ended December 31, 2024

+ The Reference Rate Price shown is as of the last business

day during the period.

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.

In exchange for a fee, the Sponsor has agreed to assume

most of the expenses incurred by the Trust.

For the period covered by this report, the Trust did not incur a Sponsor Fee.

only source of liquidity is its sales of bitcoin.

The Trust will pay the Sponsor a unified fee of 0.25%

per annum (the “Sponsor Fee”) as compensation for services performed under the Trust Agreement.

The Trust’s only ordinary

recurring expense is expected to be the Sponsor Fee.

The Sponsor previously waived the entire Sponsor Fee on the first $1 billion of Trust

assets for the 6-month period commencing on the day the Trust’s Shares were initially listed on the Exchange.

Effective July 11,

2024, this waiver expired, and the Sponsor is no longer waiving the Sponsor Fee.

The Sponsor Fee is calculated on a daily basis (accrued at 1/365 of

the applicable percentage of the NAV on that day) and paid on a monthly basis.

To cover the Sponsor’s Fee, and extraordinary expenses

not assumed by the Sponsor, the Sponsor or its delegate will cause the Trust (or its delegate) to instruct the Execution Agent to convert

bitcoin held by the Trust into U.S.

Because the Trust does not have any income, it will need to sell bitcoin to cover the Sponsor’s

Fee and expenses not assumed by the Sponsor, if any.

The Trust may also be subject to other liabilities (for example, as a result of litigation)

that have also not been assumed by the Sponsor.

The only source of funds to cover those liabilities are sales of bitcoin held by the Trust.

Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Trust, the Trust will

still need to sell bitcoin to pay the Sponsors Fee.

The result of these sales is a decrease in the amount of bitcoin represented by each

To cover the Sponsor’s Fee and expenses not assumed by the Sponsor,

the Sponsor or its delegate will cause the Trust (or its delegate) to convert bitcoin into U.S.

dollars at the price available through

the Prime Execution Agent.

The number of bitcoins represented by a Share will decline each time the Trust pays the Sponsor Fee or any

Trust expenses not assumed by the Sponsor by transferring or selling bitcoins.

The Trust is responsible for paying any costs associated

with the transfer of bitcoin to the Sponsor or the sale of bitcoin.

However, under the terms of each Authorized Participant Agreement,

the Authorized Participants will be responsible for any brokerage or transaction costs associated with the sale or transfer of Bitcoin

incurred in connection with the fulfillment of a creation or redemption order

The Trust’s only ordinary recurring expense is expected to be

the Sponsor Fee.

In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume the marketing and the following administrative

expenses of the Trust:

the fees of the Trustee, the Trust Administrator, Fund Accountant, Transfer Agent, and Marketing Agent, the Custodians’

Fee, Exchange listing fees, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and ordinary

legal fees and expenses.

There is no cap on the amount of these Sponsor paid expenses.

The Trust may incur certain non-recurring expenses that are not assumed

by the Sponsor, including but not limited to, taxes and governmental charges, any applicable brokerage commissions, financing charges

or fees, Bitcoin network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor

(or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders (including, for example,

in connection with any fork of the Bitcoin blockchain), any indemnification of the Cash Custodian, Bitcoin Custodian, Trust Administrator

or other agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees

and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

The Trust has not entered into any off-balance sheet arrangements that

have or are reasonably likely to have a current or future effect on the Trust’s financial condition, changes in financial condition,

revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to

Shareholders.

The Trust’s only source of liquidity is its sales of bitcoin.

Results of Operations

For the fiscal period ended December 31, 2023, the Trust had no operations

other than a sale to WisdomTree Inc., the parent of the Sponsor, of 1,000 shares at $50 per share for total proceeds of $50,000.

Subsequent to December 31,

2023, on January 8, 2024, WisdomTree Inc.

purchased an additional 49,000

shares at $50 per share for total proceeds of $2,450,000.

Total proceeds to the Trust from these initial

sales of the shares were $2,500,000.

On January 8, 2024, the Trust purchased 53.115 bitcoin

with the proceeds of the initial sale of shares using the Prime Execution Agent.

Selected Financial Highlights for the Twelve-Month period ended

December 31, 2024

For the Twelve Months ended

December 31, 2024

Net investment loss

Net realized and unrealized gain on investment in bitcoin

$ 128,766,609

Net increase in net assets resulting from operations

$ 128,475,984

$ 360,517,232

Net realized and unrealized gain on investment

in bitcoin for the twelve months ended December 31, 2024 was $128,766,609 which includes a net change in unrealized appreciation on investment

in bitcoin of $127,561,373.

Increase in net realized and unrealized gain on investment in bitcoin for the twelve-month period ended December

31, 2024 was driven by bitcoin price appreciation from $46,411.68 per bitcoin as of January 10, 2024 (the end of day price prior to the

commencement of operations) to $93,358.58 per bitcoin as of December 31, 2024.

Net increase in net assets resulting from operations was

$128,475,984 for the twelve months ended December 31, 2024 which consisted of net investment loss of -$290,625, net realized gains of

$1,205,236 and a $127,561,373 net increase in unrealized appreciation on investment in bitcoin.

Net assets increased to $360,517,232 at

December 31, 2024 and total return (based on NAV per Share) for the twelve-month period was 98.08%.

For the twelve months ended December

31, 2024, the $360,467,232 net increase in net assets resulted from the aforementioned bitcoin price appreciation, net investment loss,

net realized gain and by $231,991,248 of net increase resulting from capital share transactions.

Performance Summary

For the period January 11, 2024 (commencement of trading) to December

31, 2024, the Exchange market value of each Share increased from $49.32 per Share to $98.65 per Share.

The Share price low and high for

the period ended December 31, 2024 and related change from the Share price on January 11, 2024 was as follows:

Shares traded at a low

of $41.65 per Share (-15.55%) on January 23, 2024, and a high of $113.42 per Share (+129.97%) on December 17, 2024.

The total return for

the Trust on a market value basis was +100.02%.

For the period January 11, 2024, through December 31, 2024, bitcoin’s

(BTC) spot price rallied 103%, leading to strong gains for the Trust.

The rally was initially driven by spot bitcoin ETP demand following

their historic launch on January 11, 2024, improving macroeconomic sentiment supporting investor risk appetite, and the anticipation leading

up to the April 2024 bitcoin halving event, which has historically provided upside potential for BTC.

However, after BTC hit a record

high of $73,000 in March 2024, prices trended lower until the end of the third quarter.

The third quarter was a positive quarter for BTC

as the kickoff of the Federal Reserve interest rate easing cycle and increased chances of a crypto-supportive administration fueled the

bullish sentiment around cryptocurrencies.

However, more than half of 2024’s gains were posted in the fourth quarter, following

the results of the U.S.

presidential election.

As part of his campaign for re-election, President Trump indicated that he would be a “crypto

president”, and he also touted major plans for the digital assets industry that, if implemented, could lead to significant regulatory

progress, increased institutional adoption, and formal legitimization of the asset class in traditional finance, all of which would support

Critical Accounting Estimates

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financial statements, the Trust follows ASC 820-10, which outlines the application of fair value accounting.

ASC 820 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

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.

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Those markets include, but are not limited to, Binance,

Bitfinex, Bitflyer, Bitstamp, Coinbase, Crypto.com, Gemini, HitBTC, Huobi, itBit, Kraken, KuCoin, LMAX Digital, OKEx and Poloniex.

Sponsor then, through a service provider, calculates on each valuation period, the highest volume venue during the 60-minute period prior

to 4:00 ET for bitcoin.

The Sponsor then identifies that market as the principal market for bitcoin during that period, and uses the price

for bitcoin from that venue at 4:00 ET as the principal market price.

To the extent

there are any determinations that the Sponsor and the Trust Administrator make, such determinations will be made in good faith, and neither

the Sponsor nor the Trust Administrator will be liable for any errors contained therein.

Neither the Sponsor nor the Trust Administrator

will be liable to DTC, Authorized Participants, the Shareholders or any other person for errors in judgment.

See section 1A — Risk Factors for a

discussion of market risk.

Bitfinex, Bitflyer, Bitstamp, Bullish, Coinbase, Crypto.com, Gemini, HitBTC, Huobi, itBit, Kraken, KuCoin, LMAX Digital, OKEx and Poloniex.

The Sponsor then, through a service provider, calculates on each valuation period, the highest volume venue during the 60-minute period

prior to 4:00 ET for bitcoin.

The Sponsor then identifies that market as the principal market for bitcoin during that period, and uses

the price for bitcoin from that venue at 11:59:59 p.m.

ET as the principal market price.

To the extent there are any determinations

that the Sponsor and the Trust Administrator make, such determinations will be made in good faith, and neither the Sponsor nor the Trust

Administrator will be liable for any errors contained therein.

Neither the Sponsor nor the Trust Administrator will be liable to DTC,

Authorized Participants, the Shareholders or any other person for errors in judgment.

See section 1A - Risk Factors for a discussion of market 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 Sponsor’s Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable, the Trust may acquire Trade

Credits from Coinbase Credit, Inc.

(the “Trade Credit Lender”) on a short-term basis pursuant to the Coinbase Trade Financing

Agreement (the “Trade Financing Agreement”).

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 Sponsor’s

Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable, the Trust may acquire Trade Credits from Coinbase

(the “Trade Credit Lender”) on a short-term basis pursuant to the Coinbase Trade Financing Agreement (the “Trade

Financing Agreement”).

The Trust generally must repay Trade Credits by 6:00 p.m.

ET (the “Settlement

Deadline”) on the calendar day immediately following the day the Trade Credit was extended by the Trade Credit Lender to the Trust

(or, if such day is not a business day, on the next business day).

Pursuant to the Trade Financing Agreement, the Trust has granted a

security interest, lien on, and right of set off against all of the Trust’s right, title and interest, in the Trust’s Trading

Balance and Vault Balance established pursuant to the Prime Execution Agent Agreement and Custodian Agreement, in order to secure the

repayment by the Trust of the Trade Credits and financing fees to the Trade Credit Lender.

If the Trust fails to repay the Trade Credits

to the Trade Credit Lender on time and in full, the Trade Credit Lender can take control of the Trust’s assets and liquidate them

to repay the Trade Credit debt owed by the Trust to the Trade Credit Lender.

ET (the “Settlement Deadline”) on the

calendar day immediately following the day the Trade Credit was extended by the Trade Credit Lender to the Trust (or, if such day is not

a business day, on the next business day).

Pursuant to the Trade Financing Agreement, the Trust has granted a security interest, lien

on, and right of set off against all of the Trust’s right, title and interest, in the Trust’s Trading Balance and Vault Balance

established pursuant to the Prime Execution Agent Agreement and Custodian Agreement, in order to secure the repayment by the Trust of

the Trade Credits and financing fees to the Trade Credit Lender.

If the Trust fails to repay the Trade Credits to the Trade Credit Lender

on time and in full, the Trade Credit Lender can take control of the Trust’s assets and liquidate them to repay the Trade Credit

debt owed by the Trust to the Trade Credit Lender.

Trading and Other Risks

See section 1A — Risk Factors for a

discussion of trading and other related risks.

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See section 1A - Risk Factors for a discussion of trading and other

related risks.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Not applicable.

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statements being filed therein.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis