10-Q: Bitwise Bitcoin ETF Sees Strong Asset Growth Amid Bitcoin Price Surge

Bitwise Bitcoin ETF reports significant net asset growth and unrealized appreciation in Q3 2025, driven by a rising bitcoin price, despite increased operating expenses.

Summary

• Net assets increased to $4.70 billion as of September 30, 2025, up from $3.76 billion at December 31, 2024.
• The Trust's Principal Market NAV per share rose to $62.20 at September 30, 2025, from $50.85 at December 31, 2024.
• Bitcoin holdings increased to 41,086.7391 as of September 30, 2025, from 40,289.1335 at December 31, 2024.
• Net increase in net assets resulting from operations for the nine months ended September 30, 2025, was $762.94 million, compared to $359.79 million for the same period in 2024.
• Net change in unrealized appreciation on investment in bitcoin for the nine months ended September 30, 2025, was $727.80 million, significantly higher than $434.35 million for the comparable period in 2024.
• The Sponsor Fee for the nine months ended September 30, 2025, was $6.09 million, up from $2.85 million (net $1.94 million after waivers) in the prior year, primarily due to increased asset value and the expiration of the fee waiver.
• The bitcoin BRRNY price appreciated from $93,730.35 per bitcoin as of December 31, 2024, to $114,084.80 per bitcoin as of September 30, 2025.
• The Trust redeemed 9,260,000 Shares during the three-month period ended September 30, 2025, with average prices ranging from $60.37 to $62.95.

Sentiment

Score: 8

Explanation: The Trust demonstrated strong financial performance driven by significant appreciation in bitcoin's value and substantial growth in net assets. While expenses increased due to the expiration of fee waivers, the overall operational results and asset growth are very positive. The primary risk remains the extreme volatility of the underlying asset, as highlighted by the October 2025 flash crash, but the reported period itself was strong.

Positives

• Significant growth in net assets, reaching $4.70 billion by September 30, 2025.
• Strong appreciation in Principal Market NAV per share, increasing from $50.85 to $62.20.
• Substantial net change in unrealized appreciation on bitcoin holdings, indicating a favorable market for the underlying asset.
• Net increase in net assets resulting from operations more than doubled year-over-year for the nine-month period.
• The Trust's total return at net asset value for the nine months ended September 30, 2025, was 22.32%.

Negatives

• Increased Sponsor Fee due to higher asset value and the expiration of the fee waiver, leading to a higher net investment loss.
• The Trust's shares traded at an average discount of 0.02% to NAV from January 11, 2024, to September 30, 2025.
• Net increase in shares issued and outstanding for the nine months ended September 30, 2025, was 1,580,000, significantly lower than 72,380,000 for the comparable period in 2024, indicating slower capital inflows.

Risks

• Extreme volatility of the trading price of bitcoin and other crypto assets, which could materially adversely affect the value of the Shares.
• The recentness of the development of bitcoin and other crypto assets, and the uncertain medium-to-long term value of the Shares due to factors relating to technology developments and fundamental investment characteristics.
• The value of the Shares depends on the acceptance of bitcoin and blockchain technologies, a new and rapidly evolving industry.
• The unregulated nature and lack of transparency surrounding the operations of blockchain technologies and crypto assets, which may adversely affect the value of bitcoin and the Shares.
• Changes in laws or regulations, or actions taken by governmental authorities or U.S. federal or state regulatory bodies (including the SEC and CFTC), that may affect the value of the Shares or restrict the use of bitcoin or other crypto assets.
• The possibility that the Trust or the Sponsor could be subject to regulation as a money service business or money transmitter, resulting in extraordinary expenses or decreased liquidity for Shares.
• Regulatory changes or interpretations, including those from the SEC's Crypto Task Force, could obligate the Trust or Sponsor to register and comply with new regulations, leading to potentially extraordinary, nonrecurring expenses.
• Potential conflicts of interest that may arise among the Sponsor or its affiliates and the Trust.
• Reliance on the security, stability, and performance of service providers (Bitcoin Custodian, Cash Custodian, Prime Execution Agent), which may be subject to operational failures, conflicts of interest, tariffs, and regulatory actions.
• General economic, market, and business conditions, and political developments (e.g., trade policies, global pandemics, inflationary pressures, geopolitical tensions) could negatively impact bitcoin holdings and disrupt operations.
• A sudden flash crash in October 2025, where automated liquidations reportedly exceeded $19 billion and total market capitalization fell by roughly 14 percent, highlights the extreme volatility and potential for significant losses.
• Negative perceptions, lack of stability, and absence of standardized regulation in the digital asset economy may reduce confidence and lead to greater volatility.
• The Trust is not actively managed and will not take actions to mitigate the impacts of bitcoin price volatility.

Future Outlook

The Trust's future performance is subject to the extreme volatility of crypto asset markets and the acceptance of bitcoin and blockchain technologies. The Sponsor anticipates that the Trust will have an immaterial amount of cash flow from operations and an insignificant cash balance, as it does not borrow to meet liquidity needs. The Trust is not actively managed to mitigate the impacts of bitcoin price volatility.

Management Comments

• The Trust's investment objective is to seek to provide shareholders of the Trust (Shareholders) with exposure to the value of bitcoin held by the Trust that is reflective of the actual bitcoin market in which investors can purchase or sell bitcoin, less the expenses of the Trusts operations and other liabilities.
• The Sponsor expects that the Trust will have an immaterial amount of cash flow from its operations and that its cash balance will be insignificant at the end of each reporting 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.
• The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price of bitcoin.

Industry Context

The filing reflects the ongoing growth and increasing institutional acceptance of Bitcoin ETFs as a vehicle for investors to gain exposure to bitcoin. The significant increase in the Trust's net assets and the appreciation in bitcoin's price align with a broader positive trend in the crypto market during the reported period, despite inherent volatility. The mention of a "flash crash" in October 2025, immediately following the reporting period, underscores the continued high-risk, high-reward nature of the digital asset industry, where rapid price movements and liquidations can occur. The Trust's passive management approach means its performance is directly tied to bitcoin's market movements, distinguishing it from actively managed crypto funds.

Comparison to Industry Standards

• The Trust's 0.20% Sponsor Fee is competitive within the Bitcoin ETF market, comparing favorably to some early Bitcoin trusts that had higher fees before the advent of spot ETFs. For example, Grayscale Bitcoin Trust (GBTC) historically had a 2.00% fee, which was significantly higher before its conversion to an ETF. Newer spot Bitcoin ETFs launched in 2024 often have fees ranging from 0.19% to 0.30%, with some offering temporary waivers.
• The average discount of 0.02% to NAV for BITB shares from January 2024 to September 2025 indicates efficient market pricing, generally in line with well-established ETFs that aim to track their underlying assets closely. This contrasts sharply with the significant discounts (sometimes over 40%) seen in closed-end Bitcoin trusts prior to their ETF conversions.
• The total return of 22.32% for the nine months ended September 30, 2025, reflects the performance of bitcoin itself during that period. This performance should be benchmarked against the direct price movement of bitcoin and other similar spot Bitcoin ETFs, rather than against traditional equity or bond market indices, given its specialized nature.

Related Party Transactions

• The Trust pays a Sponsor Fee of 0.20% per annum of its bitcoin holdings to Bitwise Investment Advisers, LLC (the Sponsor).
• The Sponsor contractually waived the entire Sponsor Fee on the first $1 billion of Trust assets through July 10, 2024.
• The Sponsor assumes and pays normal operating expenses of the Trust in exchange for the Sponsor Fee.
• The Sponsor owned no Shares of the Trust as of September 30, 2025.
• Bitwise Investment Manager, LLC (BIM), an affiliate of the Sponsor, was involved in initial seed capital transactions and the purchase/sale of Seed Baskets.

Stakeholder Impact

• Shareholders: Benefited from the significant appreciation in the value of the Trust's bitcoin holdings, reflected in the increased NAV per share and total return. Exposed to the extreme volatility and regulatory risks associated with bitcoin.
• Sponsor (Bitwise Investment Advisers, LLC): Benefited from increased Sponsor Fees due to the growth in net assets and the expiration of fee waivers.
• Service Providers (e.g., Coinbase Custody Trust Company, LLC, BNY Mellon): Continue to provide essential services to the Trust, ensuring its operational stability.

Next Steps

• Continue to monitor the extreme volatility of bitcoin and other crypto assets.
• Observe any potential changes in laws or regulations affecting digital assets or the Trust's operations.
• Track the impact of general economic, market, and political developments on the value of the Trust's bitcoin holdings.

Key Dates

Recommendation

The Bitwise Bitcoin ETF has demonstrated strong performance in the reported period, driven by significant bitcoin price appreciation and substantial asset growth. The ETF effectively tracks its underlying asset with a competitive fee structure and minimal premium/discount to NAV. However, the inherent and extreme volatility of bitcoin, as evidenced by the October 2025 flash crash mentioned in the filing, presents a substantial risk. The Trust's passive management means it does not mitigate this volatility. For investors already holding, maintaining exposure to bitcoin through this efficient vehicle is reasonable given the positive trend in the reported period, but new 'buy' recommendations would need to carefully weigh the high volatility and regulatory uncertainties against the potential for further growth. A 'hold' recommendation acknowledges the strong past performance while emphasizing the significant, unmitigated risks of the underlying asset.

Keywords

Bitcoin ETF, BITB, Bitwise, Bitcoin, Crypto, Digital Assets, Exchange Traded Product, Cryptocurrency, SEC Filing, 10-Q, Financial Report, Investment Trust, Asset Management