10-Q: CoinShares Bitcoin ETF Reports Strong Q2 Gains Amid Outflows

CoinShares Bitcoin ETF reported significant net income and NAV per share growth in Q2 2025, driven by Bitcoin's appreciation, despite substantial share redemptions.

Summary

• Net assets increased to $625,787,170 at June 30, 2025, from $480,386,204 at March 31, 2025, but decreased from $826,115,990 at December 31, 2024.
• Investments in Bitcoin, at fair value, were $625,905,470 at June 30, 2025, down from $826,306,338 at December 31, 2024.
• Net income for the three months ended June 30, 2025, was $141,141,457, a significant improvement from a net loss of $69,741,963 for the same period in 2024.
• Net income per share for Q2 2025 was $6.73, compared to a net loss per share of $2.43 in Q2 2024.
• For the six months ended June 30, 2025, net income was $64,528,638, up from $20,931,876 in the prior year period.
• Net asset value per share increased by 28.7% from $23.49 at March 31, 2025, to $30.22 at June 30, 2025.
• Bitcoin's value appreciated by 28.7% from $83,057 at March 31, 2025, to $106,930 at June 30, 2025.
• The Trust experienced net redemptions of 10,555,000 shares, totaling $264,857,458, for the six months ended June 30, 2025.
• Total shares outstanding decreased to 20,705,000 at June 30, 2025, from 31,260,000 at December 31, 2024.
• The Sponsor Fee accrues daily at an annual rate of 0.25% of the Trust's Bitcoin holdings.

Sentiment

Score: 6

Explanation: While the underlying asset (Bitcoin) performed exceptionally well, leading to strong net income and NAV per share growth, the significant net redemptions and decrease in total assets indicate a challenge in retaining or attracting capital to the ETF itself. This presents a mixed signal, balancing strong investment performance with fund outflows.

Positives

• Net income for Q2 2025 was $141,141,457, a substantial turnaround from a $69,741,963 loss in Q2 2024.
• Net asset value per share increased by 28.7% to $30.22 in Q2 2025, reflecting strong Bitcoin price appreciation.
• Total return at net asset value for Q2 2025 was 28.65%, closely tracking Bitcoin's 28.7% appreciation, indicating effective management of the underlying asset.
• Realized gains from investment were $11,139,128 in Q2 2025 and $116,817,004 for H1 2025, demonstrating successful disposition of Bitcoin holdings.

Negatives

• Net assets decreased from $826,115,990 at December 31, 2024, to $625,787,170 at June 30, 2025, primarily due to significant share redemptions.
• The Trust experienced net redemptions of 10,555,000 shares, valued at $264,857,458, for the six months ended June 30, 2025, indicating net capital outflow.
• Shares outstanding decreased by over 10 million from December 31, 2024, to June 30, 2025, reflecting reduced investor holdings in the ETF.

Risks

• Changes in market prices and conditions for Bitcoin and the Shares can significantly impact the Trust's performance.
• Disruptions in computer systems and data centers, or issues with new technology platforms used by the Trust and its vendors, pose operational risks.
• Changes in laws or regulations, including those concerning taxes, could adversely affect the Trust's operations and financial condition.
• The costs and effects of any litigation or regulatory investigations could impact the Trust's financial results.
• The ability to maintain a positive reputation is crucial for investor confidence and the Trust's success.
• Broader world economic and political developments can influence the value of Bitcoin and the Trust's Shares.

Future Outlook

The Trust's future performance is subject to risks including changes in Bitcoin market prices and conditions, general economic factors, technological disruptions, regulatory changes (including taxes), potential litigation, and the ability to maintain a positive reputation. The Sponsor does not undertake an obligation to update forward-looking statements.

Management Comments

• The Principal Executive Officer and Chief Financial Officer of the Sponsor concluded that, as of the end of the period covered by this Quarterly Report, the Trust's disclosure controls and procedures were effective.
• The Sponsor believes the risk of loss under general indemnification arrangements with service providers to be remote.

Industry Context

The performance of the CoinShares Bitcoin ETF is directly tied to the price movements of Bitcoin. The significant appreciation in Bitcoin's value during Q2 2025 (28.7%) directly translated into strong net income and NAV per share growth for the ETF. However, the substantial net redemptions experienced by the ETF, leading to a decrease in total net assets and shares outstanding, suggest that despite the positive underlying asset performance, this specific ETF may be facing competitive pressures or a shift in investor sentiment regarding its structure or fees compared to other Bitcoin investment vehicles.

Comparison to Industry Standards

• The Trust's investment objective is to reflect the performance of Bitcoin as represented by the CME CF Bitcoin Reference Rate New York Variant, less liabilities and expenses.
• The total return at NAV for Q2 2025 was 28.65%, which closely aligns with Bitcoin's appreciation of 28.7% during the same period, indicating the Trust is effectively meeting its investment objective.
• The Sponsor Fee of 0.25% annually is competitive within the Bitcoin ETF market, which has seen fee compression since the launch of spot Bitcoin ETFs in early 2024.

Management Changes

Corporate Governance

Legal Proceedings

• No legal proceedings were reported.

Related Party Transactions

• The Initial Sponsor waived Sponsor fees for the first three months of the Trust's operations, through April 10, 2024, amounting to $156,867 for the six months ended June 30, 2024.
• Valkyrie Funds LLC, an affiliate of the Initial Sponsor, purchased 40,000 Shares for $520,000 on January 10, 2024.
• CoinShares Capital Markets (Jersey) Limited, an affiliate of the current Sponsor, served as a Bitcoin Trading Counterparty and fulfilled approximately $295 million in purchase orders prior to March 15, 2024.
• As of June 30, 2025, affiliates of the Sponsor owned 18,140,000 Shares of the Trust.

Stakeholder Impact

• Shareholders experienced a significant increase in Net Asset Value per Share due to Bitcoin's appreciation, but those who held shares from December 31, 2024, saw a decrease in the overall value of their investment in the fund due to net redemptions.
• The Sponsor benefits from increased Sponsor Fees as the value of Bitcoin holdings increases, despite the decrease in the quantity of Bitcoin held by the Trust.

Next Steps

• The Trust will continue to operate with its investment objective to reflect the performance of Bitcoin, less liabilities and expenses.
• The Sponsor will continue to determine the valuation sources and policies for the Trust's financial statements in accordance with GAAP.

Key Dates

Recommendation

The Trust demonstrated strong investment performance in Q2 2025, with significant net income and NAV per share growth, directly reflecting Bitcoin's appreciation. This indicates the ETF is effectively tracking its underlying asset. However, the substantial net redemptions and decrease in total net assets from year-end 2024 suggest a significant outflow of capital from the fund itself. While the underlying asset is performing well, the fund's ability to attract and retain capital is a concern. Investors should 'hold' to observe if the fund can reverse the outflow trend, as the positive Bitcoin performance is currently offset by a shrinking asset base.

Keywords

Bitcoin ETF, Cryptocurrency, Digital Assets, BRRR, CoinShares, SEC Filing, 10-Q, Investment Fund, Exchange Traded Fund, Bitcoin Price