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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-27 · 122 added, 85 removed, 186 unchanged (53% of the section changed)

MANAGEMENT’S 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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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.

Share and the Trust's NAV per Share for the fiscal year ended December 31, 2025.

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, 2025.

End of Period

Reference Rate

For the twelve-month period ended December 31, 2024

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

day during the period.

For the fiscal year ended December 31, 2025

+ 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

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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

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

1/366 in a leap year, of the applicable annual Sponsor Fee percentage multiplied by the Trust’s NAV) 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.

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.

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

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

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Results of Operations

Selected Financial Highlights for the Twelve-Month period ended

Selected Financial Highlights for the Fiscal Year ended December

31, 2025 and the Fiscal Year ended December 31, 2024

For the Fiscal Year ended

December 31, 2025

For the Twelve Months ended

For the Fiscal Year ended

December 31, 2024

Net investment loss

Net realized and unrealized gain on investment in bitcoin

Net realized and unrealized gain (loss) on investment in bitcoin

$ (36,154,047 )

Net increase in net assets resulting from operations

$ 128,766,609

Net increase (decrease) in net assets resulting from operations

$ (36,669,448 )

$ 128,475,984

$ 139,686,992

$ 360,517,232

Net realized and unrealized loss on investment

in bitcoin for the fiscal year ended December 31, 2025 was $(36,154,047) which includes a net decrease in unrealized appreciation on investment

in bitcoin of $(94,408,359).

The net realized and unrealized loss on investment in bitcoin for the fiscal year ended December 31, 2025

was driven by bitcoin price depreciation from $93,358.58 per bitcoin as of December 31, 2024 to $87,418.55 per bitcoin as of December

Net decrease in net assets resulting from operations was $(36,669,448) for the fiscal year ended December 31, 2025 which consisted

of net investment loss of $(515,401), net realized gain of $58,254,312 and a $(94,408,359) net decrease in unrealized appreciation on

investment in bitcoin.

Net assets decreased to $139,686,992 at December 31, 2025 and total return (based on NAV per Share) for the twelve-month

period was (6.59)%.

For the fiscal year ended December 31, 2025, the $(220,830,240) net decrease in net assets resulted from the aforementioned

bitcoin price depreciation, net investment loss, net realized gain and by $(184,160,792) of net decrease resulting from capital share

transactions.

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 for the fiscal year ended December 31, 2024 was $128,766,609 which includes a net increase 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.

Increase in net realized and unrealized gain on investment in bitcoin for the fiscal year 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

$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.

for the fiscal year 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 fiscal year was 98.08%.

For the fiscal year 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 fiscal year ended December 31, 2025, the

Exchange market value of each Share decreased from $98.65 per Share to $92.68 per Share.

The Share price low and high for the fiscal year

ended December 31, 2025 and related change from the Share price on December 31, 2024 was as follows:

Shares traded at a low of $81.29

per Share (-17.60%) on April 8, 2025, and a high of $132.96 per Share (+34.78%) on October 6, 2025.

For the fiscal year ended December

31, 2025, the total return for the Trust on a market value basis was -6.05%.

Bitcoin ended 2025 in negative territory despite

strong gains during the second and third quarters.

After a weak first quarter-driven by macroeconomic worries, deteriorating investor

sentiment, heavy outflows from crypto ETPs, and the ByBit hack, bitcoin staged a robust recovery mid-year.

Improving risk appetite and

renewed institutional demand accelerated ETP inflows, and a series of U.S.

legislative developments, including progress on the CLARITY

Act, GENIUS Act, Anti-CBDC Surveillance Act, and an executive order permitting crypto in retirement accounts served as tailwinds for digital

Additional support came from Federal Reserve rate cuts and rising uncertainty around the potential U.S.

government shutdown.

the fourth quarter pared these gains.

A broad risk-off environment took hold as hawkish Federal Reserve signals emerged ahead of the December

rate cut, compounded by the U.S.

government shutdown, widespread forced liquidations of leveraged positions, and technical breakdowns

as bitcoin failed to hold key support levels.

Market sentiment deteriorated sharply and spot crypto ETPs posted record outflows in November,

as the Crypto Fear & Greed Index plunged into “extreme fear.”

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.

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.

For the fiscal period ended December 31, 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

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The Trust’s periodic financial statements are prepared in accordance with

GAAP, including the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, “Fair

Value Measurements and Disclosures” (“ASC 820”) and utilizes a platform-traded price from the Trust’s principal

market for bitcoin on the Trust’s financial statement measurement date.

The Sponsor determines in its sole discretion the valuation

sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The Trust obtains a price from a

principal market (or in the absence of a principal market, the most advantageous market) for bitcoin, which may be through third party

vendor or directly from such principal market.

ASC 820 defines “principal market” as the market with the greatest volume and

level of activity for the asset or liability.

The determination of the principal market (and, as a result, the market participants in

the principal market) is made from the perspective of the reporting entity.

ASC 820 defines “most advantageous market” as

the market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the

liability, after taking into account transaction costs and transportation costs.

GAAP, including the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 820, Fair Value

Measurements and Disclosures (“ASC 820”) and utilizes a platform-traded price from the Trust’s principal market

for bitcoin on the Trust’s financial statement measurement date.

The Sponsor determines in its sole discretion the valuation sources

and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The Trust obtains a price from a principal

market (or in the absence of a principal market, the most advantageous market) for bitcoin, which may be through a third-party vendor

or directly from such principal market.

ASC 820 defines “principal market” as the market with the greatest volume and level

of activity for the asset or liability.

The determination of the principal market (and, as a result, the market participants in the principal

market) is made from the perspective of the reporting entity and the reporting entity must have access to the principal (or most advantageous)

market at the measurement date.

ASC 820 defines “most advantageous market” as the market that maximizes the amount that would

be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after taking into account transaction

costs and transportation costs.

To determine which market is the Trust’s

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Trust’s bitcoin, the principal market in each scenario is determined by looking at the market-based level of volume and bitcoin

trading activity.

Bitcoin trading counterparties, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and

Exchange Markets, each as defined in the FASB ASC Master Glossary.

Based on information reasonably available to the Trust, Exchange Markets

have the greatest volume and level of activity for the asset.

The Trust therefore looks to accessible Exchange Markets as opposed to the

Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market.

As a result of the aforementioned

analysis, an Exchange Market has been selected as the Trust’s principal market.

The Trust determines its principal market (or in

the absence of a principal market the most advantageous market) on a quarterly basis to determine which market is its Principal Market

for the purpose of calculating fair value for the creation of quarterly and annual financial statements.

trading activity and whether the Trust has access to that market.

Bitcoin trading counterparties, may transact in a Brokered Market, a

Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB ASC Master Glossary.

Based on information

reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset.

The Trust therefore

looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine

its principal market.

As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust’s principal

The Trust determines its principal market (or in the absence of a principal market, the most advantageous market) on a quarterly

basis to determine which market is its Principal Market for the purpose of calculating fair value for the preparation of quarterly and

annual financial statements.

The Sponsor has developed a process for identifying

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The process begins by identifying

publicly available, well established and reputable bitcoin trading venues (Platform Markets, as defined in the FASB ASC Master Glossary),

which are selected by the Sponsor and its affiliates in their sole discretion.

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

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.

publicly available, well established and reputable bitcoin trading venues or platform markets, which are selected by the Sponsor and its

affiliates in their sole discretion.

Those markets include, but are not limited to, the Constituent Bitcoin Platforms used to calculate

the Reference Rate.

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 and determines whether the Trust has access to that market venue.

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 p.m.

the principal market price.

To the extent there are any determinations

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related risks.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

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