What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-09 · 32 added, 38 removed, 80 unchanged (47% of the section changed)

10 unchanged sentences

The Index is designed to reflect the performance of bitcoin in U.S.

In seeking to achieve its investment objective, the Trust will hold bitcoin and will value its Shares daily based on the same methodology used to calculate the Index.

In seeking to achieve its investment objective, the Trust holds bitcoin and values its Shares daily based on the same methodology used to calculate the Index.

The Trust is passively managed and does not pursue active management investment strategies, invest in derivatives, or loan or pledge its assets.

39 unchanged sentences

The Trust has not had any operations prior to January 11, 2024, other than matters relating to its organization and the registration of the Shares under the Securities Act of 1933 (the “1933 Act”).

The Trust’s net assets increased from $40 on December 31, 2023 to $10.2 billion on March 31, 2024.

The change in the Trust’s net assets resulted from an increase in outstanding Shares, which rose from 1 on December 31, 2023 to 165,475,000 on March 31, 2024 as a result of 165,500,000 Shares (6,620 Baskets) being created and 25,001 Shares (1 Basket) being redeemed during the quarter and an increase in the price of bitcoin, which rose 53.62% from $45,956.16 on January 11, 2024 (inception) to $70,596.99 on March 31, 2024.

The Trust’s NAV per Share increased 54.75% from $40.00 on December 31, 2023 to $61.90 on March 28, 2024 (last business day).

The Trust ’s NAV per Share of $63.97 at March 13, 2024 was the highest during the quarter, compared with a low of $34.28 at January 23, 2024.

During the quarter ended March 31, 2024, the quantity of bitcoin owned by the Trust and held by the bitcoin custodian increased from 0 on December 31, 2023 to 144,704.48094252 on March 31, 2024.

The increase in quantity resulted from using cash proceeds received from creation transactions to purchase bitcoin.

The net increase in net assets resulting from operations for the quarter ended March 31, 2024 was $2.6 billion, resulting from an unrealized gain on investment in bitcoin of $2.6 billion and a net realized loss of $51 thousand from the sale of the investment in bitcoin for the redemption of Shares.

Effective January 9, 2024, the Trust and the Sponsor entered into a Fee Waiver Agreement in which the Sponsor agreed to waive the entirety of the Sponsor Fee (the “Waiver”).

The Waiver will continue for a period at least through July 31, 2024 (the “Initial Waiver Period”);

provided however, the Sponsor may elect to extend the Waiver beyond the Initial Waiver Period at its sole discretion.

The Waiver continued for a period through July 31, 2024 (the “Initial Waiver Period”).

The Quarter Ended June 30, 2024

The Trust’s net assets increased from $10.2 billion on March 31, 2024 to $10.6 billion on June 30, 2024.

The change in the Trust’s net assets resulted from an increase in outstanding Shares, which rose from 165,475,000 on March 31, 2024 to 191,500,000 on June 30, 2024 as a result of 40,450,000 Shares (1,618 Baskets) being issued and 14,425,000 Shares (577 Baskets) being redeemed during the quarter offset by a decrease in the price of bitcoin, which fell 10.24% from $70,596.99 on March 31, 2024 to $63,369.30 on June 30, 2024.

The Trust’s NAV per Share decreased 14.89% from $61.90 on March 28, 2024 (last business day) to $52.68 on June 28, 2024 (last business day).

The Trust ’s NAV per Share of $62.76 at April 08, 2024 was the highest during the quarter, compared with a low of $50.29 at May 01, 2024.

During the quarter ended June 30, 2024, the quantity of bitcoin owned by the Trust and held by the bitcoin custodian increased from 144,704.48094252 on March 31, 2024 to 167,462.80769789 on June 30, 2024.

The increase in quantity resulted from using net cash proceeds received from the increase in capital transactions to purchase bitcoin.

The net decrease in net assets resulting from operations for the quarter ended June 30, 2024 was $1.2 billion, resulting from a net unrealized depreciation of investment in bitcoin of $1.1 billion and a net realized loss of $118.1 million from the sale of the investment in bitcoin for the redemption of Shares.

The Period Ended June 30, 2024

The Trust’s net assets increased from $40 on December 31, 2023 to $10.6 billion on June 30, 2024.

The change in the Trust’s net assets resulted from an increase in outstanding Shares, which rose from 1 on December 31, 2023 to 191,500,000 on June 30, 2024 as a result of 205,950,000 Shares (8,238 Baskets) being issued and 14,450,001 Shares (578 Baskets) being redeemed during the period January 11, 2024 (inception) through June 30, 2024 and an increase in the price of bitcoin, which rose 37.89% from $45,956.16 on January 11, 2024 (inception) to $63,369.30 on June 30, 2024.

The Trust’s NAV per Share increased 31.71% from $40.00 on December 31, 2023 to $52.68 on June 28, 2024 (last business day).

The Trust ’s NAV per Share of $63.97 at March 13, 2024 was the highest during the period, compared with a low of $34.28 at January 23, 2024.

During the period ended June 30, 2024, the quantity of bitcoin owned by the Trust and held by the bitcoin custodian increased from 0 on December 31, 2023 to 167,462.80769789 on June 30, 2024.

The increase in quantity resulted from using net cash proceeds received from the increase in capital transactions to purchase bitcoin.

The net increase in net assets resulting from operations for the period ended June 30, 2024 was $1.4 billion, resulting from an unrealized gain on investment in bitcoin of $1.5 billion and a net realized loss of $118.2 million from the sale of the investment in bitcoin for the redemption of Shares.

Cash Resources and Liquidity

The Trust does not hold a cash balance except in connection with the creation and redemption of Baskets or to pay expenses not assumed by the Sponsor.

The Trust does not hold a cash balance except in connection with the issuance and redemption of Baskets or to pay expenses not assumed by the Sponsor.

To the extent the Trust does not have available cash to facilitate redemptions or pay expenses not assumed by the Sponsor, the Trust will sell bitcoin.

4 unchanged sentences

In exchange for the Sponsor Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust.

The Sponsor contractually waived the Sponsor Fee until July 31, 2024, and will accrue at an annual rate of 0.25% of the Trust’s net assets after the Initial Waiver Period.

The Sponsor contractually waived the Sponsor Fee until July 31, 2024, and will accrue at an annual rate of 0.25% of the Trust’s Bitcoin Holdings after the Initial Waiver Period.

Off Balance Sheet Arrangements and Contractual Obligations

1 unchanged sentence

While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on a Trust’s financial position.

Sponsor Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s net assets.

As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as the Trust’s net assets are not known until a future date.

Sponsor Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s Bitcoin Holdings.

As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as the Trust’s Bitcoin Holdings are not known until a future date.

Selected Operating Data

March 31, 2024

June 30, 2024

Price of bitcoin on principal market (1)

NAV per Share (2)

(1) The Trust performed an assessment of the principal market at 11:59:59 p.m., EST, on March 31, 2024.

(2) The NAV per Share was calculated using the fair value of bitcoin based on the principal market price at 11:59:59 p.m., EST, on March 31, 2024, the last day of the quarter.

March 28, 2024

(1) The Trust performed an assessment of the principal market at 11:59:59 p.m., EST, on June 30, 2024.

(2) The NAV per Share was calculated using the fair value of bitcoin based on the principal market price at 11:59:59 p.m., EST, on June 30, 2024, the last day of the quarter.

June 28, 2024

(Last Business Day)

4 unchanged sentences

Refer to the “Overview of the Trust” and “Valuation of Bitcoin and Computation of Net Asset Value” sections of Item 2 herein for a description of the Index methodology and calculation of the Trust’s NAV per Share.

The bitcoin spot markets included in the Index as of March 31, 2024 were Bitstamp, Coinbase, Gemini, itBit, Kraken, and LMAX Digital.

As of 4:00 p.m., EST, on the last business day of the quarter ended March 31, 2024, the Trust’s total value of bitcoins based on the Index Price (non-GAAP methodology) was $10,242,656,345 and the total market value of the Trust’s bitcoins based on the price of a bitcoin at 4:00 p.m., EST, in the principal market was $10,251,005,793.

The bitcoin spot markets included in the Index as of the last business day of the quarter were Bitstamp, Coinbase, Gemini, itBit, Kraken, and LMAX Digital.

As of 4:00 p.m., EST, on the last business day of the quarter ended June 30, 2024, the Trust’s total value of bitcoins based on the Index Price (non-GAAP methodology) was $10,088,964,313 and the total market value of the Trust’s bitcoins based on the price of a bitcoin at 4:00 p.m., EST, in the principal market was $10,039,748,668.

Analysis of Price Movements

2 unchanged sentences

Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Index Price, the principal market price, and the Trust’s NAV per Share from January 11, 2024 (date the first Basket of the Trust was created) to March 31, 2024.

The following table illustrates the movements in the Index Price from January 11, 2024 to March 31, 2024.

During such period, the Index Price has ranged from $39,198.82 to $73,153.50, with the straight average being $54,669.45 through March 31, 2024.

During the period from January 11, 2024 to June 30, 2024, the Index Price has ranged from $39,198.82 on January 23, 2024 to $73,153.50 on March 13, 2024.

The Sponsor has not observed a material difference between the Index Price and average prices from the constituent bitcoin spot markets individually or as a group.

End of Period

Last Business Day

January 11, 2024 to March 31, 2024

March 13, 2024

January 23, 2024

The following table illustrates the movements in the market price of bitcoin, as reported on the Trust’s principal market, from January 11, 2024 to March 31, 2024.

During such period, the price of Bitcoin has ranged from $39,631.40 to $73,308.46, with the straight average being $54,632.28 through March 31, 2024.

Bitcoin Market Price

End of Period

Last Business Day

January 11, 2024 to March 31, 2024

March 13, 2024

January 23, 2024

During the period from January 11, 2024 to June 30, 2024, the market price of bitcoin, as reported on the Trust’s principal market, has ranged from $39,631.40 on January 23, 2024 to $73,308.46 on March 13, 2024.

Shares trade in the secondary market on the Exchange.

1 unchanged sentence

The amount of the discount or premium in the trading price relative to the Trust’s NAV per Share may be influenced by various factors, including the number of Shareholders who seek to purchase or sell Shares in the secondary market and the liquidity of bitcoin.

The following chart sets out the historical closing prices for the Shares as reported by the Exchange and the Trust’s NAV per Share from January 11, 2024 to March 28, 2024 (last business day).

The following chart sets out the historical closing prices for the Shares as reported by the Exchange and the Trust’s NAV per Share from January 11, 2024 to June 28, 2024 (last business day).

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-Q

Item 2. Management’s Discussion and Analysis