10-Q: Bitwise Bitcoin ETF Reports $2.25 Billion in Net Assets for Q2 2024, Cites Bitcoin Price Volatility
Quarterly Report
Bitwise Bitcoin ETF reports its financial results for the period ended June 30, 2024, highlighting a net asset value of $2.25 billion and the impact of bitcoin price fluctuations on performance.
Summary
- Bitwise Bitcoin ETF reported its financial results for the period from January 10, 2024 (commencement of operations) through June 30, 2024.
- The ETF's net assets totaled $2,249.658 million as of June 30, 2024.
- The ETF held 37,528.2763 bitcoin as of June 30, 2024, valued at $2,249.899 million.
- The net asset value (NAV) per share was $32.67 as of June 30, 2024.
- The ETF experienced a net investment loss of $827,000 during the period.
- Net realized and unrealized gain on investment in bitcoin was $226.453 million for the period.
- The ETF had net capital share transactions resulting in an increase of $2,024.032 million.
- The Sponsor Fee, calculated at 0.20% per annum, was waived on the first $1 billion of Trust assets through July 10, 2024.
- The ETF's shares traded at an average premium of 0.01% from January 11, 2024, to June 30, 2024.
- The highest premium was 1.17% on May 20, 2024, and the highest discount was 1.79% on May 1, 2024.
Sentiment
Score: 6
Explanation: The sentiment is neutral. While the ETF has grown significantly in assets, its performance is heavily reliant on the volatile price of bitcoin, leading to both gains and losses during the reporting period. The waiver of the Sponsor Fee is a positive, but the inherent risks of bitcoin remain.
Positives
- The ETF experienced a 30.68% increase in NAV from its commencement of operations on January 10, 2024, to June 30, 2024.
- The Sponsor waived the Sponsor Fee on the first $1 billion of Trust assets through July 10, 2024, reducing expenses for shareholders.
- The ETF had significant net capital share transactions, resulting in an increase of $2,024.032 million in net assets.
Negatives
- The ETF experienced a net investment loss of $827,000 during the period from January 10, 2024, to June 30, 2024.
- The ETF's performance is subject to the volatility of bitcoin prices, as demonstrated by the net realized and unrealized loss of $398.535 million for the three months ended June 30, 2024, due to bitcoin price depreciation.
Risks
- The ETF's value is highly dependent on the price of bitcoin, which is known for its volatility.
- Fluctuations in bitcoin supply and demand, market conditions, and regulatory changes can adversely affect the value of the Shares.
- The ETF is subject to risks associated with the bitcoin network, including forks and potential security breaches.
- The ETF may incur extraordinary expenses not assumed by the Sponsor, such as taxes, governmental charges, and legal fees.
Future Outlook
The Trust's future performance is closely tied to the price of bitcoin and the overall market conditions for crypto assets.
Industry Context
The Bitwise Bitcoin ETF operates within the rapidly evolving cryptocurrency market, competing with other Bitcoin ETFs and investment vehicles offering exposure to bitcoin.
Comparison to Industry Standards
- The Bitwise Bitcoin ETF is one of several spot Bitcoin ETFs approved in the United States.
- Comparable ETFs include those from BlackRock (IBIT), Fidelity (FBTC), and Grayscale (GBTC).
- These ETFs generally aim to track the price of bitcoin, less expenses, and provide investors with a regulated and accessible way to gain exposure to the cryptocurrency.
- Performance is primarily driven by bitcoin price movements, with differences arising from expense ratios and trading volumes.
Related Party Transactions
- The Sponsor Fee is paid to Bitwise Investment Advisers, LLC, a related party.
- Bitwise Asset Management, Inc. (BAM), the parent company of the Sponsor, initially purchased seed shares.
- Bitwise Investment Manager, LLC (BIM), an affiliate of the Sponsor, purchased and redeemed shares during the period.
Stakeholder Impact
- Shareholders are exposed to the price volatility of bitcoin.
- Authorized Participants facilitate the creation and redemption of shares.
- The Sponsor and service providers receive fees for their services.
Key Dates
| Date | Description |
|---|---|
| 2019-08-29 | Bitwise Bitcoin ETF organized as a Delaware statutory trust. |
| 2023-11-09 | BAM purchased 4 Shares at $50.00 per Share for $200. |
| 2024-01-05 | Bitwise Investment Manager, LLC purchased 10,010 Shares of the Trust at $50.00 per Share for $500,500. |
| 2024-01-10 | BAM redeemed its 4 initial Seed Shares for $200 and BIM redeemed its 10,010 Shares for $500,500; Trust formally revised its NAV per Share from $50.00 per Share to $25.00 per Share; BIM purchased the initial 100,000 Shares of the Trust (the Seed Baskets) for $2,500,000, at $25.00 per Share. |
| 2024-01-10 | Trust's registration statement declared effective by the SEC. |
| 2024-01-11 | Shares of the Trust listed on the NYSE Arca, Inc. |
| 2024-06-30 | End of the reporting period for the financial results. |
| 2024-07-10 | End date for the Sponsor's waiver of the Sponsor Fee on the first $1 billion of Trust assets. |
| 2024-08-08 | Date of the report. |
Keywords
Bitwise Bitcoin ETF, Bitcoin, ETF, Net Asset Value, Sponsor Fee, Cryptocurrency, Financial Results, Investment, Shares, Volatility
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