10-Q: CoinShares Valkyrie Bitcoin Fund Reports Increase in Net Asset Value for Q3 2024

CoinShares Valkyrie Bitcoin Fund's net asset value increased to $569.66 million in Q3 2024, driven by increased share issuance and bitcoin appreciation.

Summary

• CoinShares Valkyrie Bitcoin Fund reported its financial results for the third quarter of 2024.
• The fund's net asset value increased from $518.31 million at June 30, 2024, to $569.66 million at September 30, 2024.
• This increase was primarily due to a rise in outstanding shares and the appreciation of bitcoin.
• The number of outstanding shares grew from 29,545,000 to 31,720,000 during the quarter.
• 2,730,000 shares were created and 555,000 shares were redeemed.
• Bitcoin's value appreciated by 2.4% from $61,910 to $63,418 during the same period.
• The net asset value per share increased by 2.4% from $17.54 to $17.96.
• The highest net asset value per share during the quarter was $19.22 on July 22, 2024, and the lowest was $15.05 on August 5, 2024.
• The net increase in assets from operations for the quarter was $12,632,292.
• This resulted from an increase in unrealized gain on bitcoin investment of $10,981,879, realized gains on bitcoin disposition of $1,994,668, and sponsor fees incurred of $344,255.
• The fund's investment objective is to reflect the performance of bitcoin as represented by the CME CF Bitcoin Reference Rate New York Variant.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the increase in net asset value and the fund's ability to track the performance of bitcoin. However, the inherent risks associated with bitcoin and the ongoing Sponsor Fee temper the overall sentiment.

Positives

• The fund experienced an increase in net asset value, driven by both share creation and bitcoin appreciation.
• The fund generated net income for both the quarter and the nine-month period.
• The fund's investment strategy aligns with its objective of tracking the performance of bitcoin.
• The Sponsor has agreed to assume most of the expenses incurred by the Trust in exchange for the Sponsor Fee.

Negatives

• The fund incurs a Sponsor Fee, which is an ongoing expense.
• The fund's performance is directly tied to the volatile price of bitcoin, which can lead to fluctuations in net asset value.
• The Trust is not responsible for paying any fees or costs associated with the transfer of bitcoin to the Sponsor or the sale of bitcoin for costs not included in the Sponsor Fee.

Risks

• The fund's performance is subject to the risks associated with investing in bitcoin, including price volatility and regulatory uncertainty.
• Changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies could adversely affect the fund.
• Disruptions in the computer systems and data centers of the fund and its vendors, including the Custodians, could impact operations.
• The fund's ability to maintain a positive reputation is crucial for its success.
• General economic, market and business conditions could impact the fund's performance.

Future Outlook

The report contains forward-looking statements regarding the Trust's financial conditions, results of operations, plans, objectives, future performance, and business, which are subject to risks and uncertainties.

Industry Context

This announcement reflects the growing interest in and adoption of bitcoin as an investment asset, with the CoinShares Valkyrie Bitcoin Fund providing a regulated and accessible way for investors to gain exposure to bitcoin's price movements.

Comparison to Industry Standards

• The CoinShares Valkyrie Bitcoin Fund operates similarly to other Bitcoin ETFs, such as the Grayscale Bitcoin Trust (GBTC) and the iShares Bitcoin Trust (IBIT), by providing investors with exposure to Bitcoin without directly holding the cryptocurrency.
• The 0.25% sponsor fee is competative with other Bitcoin ETFs.
• The fund's performance is directly correlated to the price of Bitcoin, similar to other Bitcoin investment products.

Related Party Transactions

• Certain officers of the Trust are affiliated with the Sponsor and are not paid any fees by the Trust for serving in such capacities.
• The Initial Sponsor agreed to waive Sponsor fees for the first three months of the Trusts operations, through April 10, 2024.
• For the nine months ended September 30, 2024, the Trust incurred $791,603 in Sponsor Fees, of which, $156,867 was waived by the Initial Sponsor.
• On January 10, 2024, Valkyrie Funds LLC, at such time an affiliate of the Initial Sponsor, purchased 40,000 Shares at a per-Share price of $13.00.
• As of September 30, 2024, affiliates of the Sponsor own 18,140,000 Shares of the Trust.

Stakeholder Impact

• Shareholders benefit from the increased net asset value and the fund's ability to track bitcoin's performance.
• Authorized participants are able to create and redeem shares in Baskets, providing liquidity to the market.
• The Sponsor receives a fee for managing the Trust, aligning its interests with the fund's performance.

Key Dates

Keywords

Bitcoin, CoinShares Valkyrie Bitcoin Fund, BRRR, Net Asset Value, ETF, Cryptocurrency, Financial Results, Q3 2024