10-K: Fidelity Bitcoin Fund 2025 Annual Report: NAV Declines Amid Market Volatility

Fidelity Wise Origin Bitcoin Fund reports a 6.56% decrease in Net Asset Value per Share for 2025, with net assets falling to $17.6 billion amidst bitcoin price volatility and increased regulatory scrutiny.

Summary

• The Trust's investment objective is to track the performance of bitcoin, as measured by the Fidelity Bitcoin Reference Rate Index, adjusted for expenses and liabilities.
• The Trust is passively managed, holds bitcoin, and does not invest in derivatives or loan/pledge its assets.
• Net Asset Value (NAV) per Share decreased by 6.56% from $81.56 as of December 31, 2024, to $76.21 as of December 31, 2025.
• The price of bitcoin on the principal market decreased by 6.32% from $93,365.36 as of December 31, 2024, to $87,463.03 as of December 31, 2025.
• Total net assets of the Trust decreased from $18.8 billion as of December 31, 2024, to $17.6 billion as of December 31, 2025.
• The net decrease in net assets resulting from operations for the year ended December 31, 2025, was $1.6 billion, primarily due to $1.1 billion in net unrealized depreciation on investment in bitcoin and a $442.2 million net realized loss from bitcoin sales for redemptions.
• Shares outstanding increased from 230,678,476 as of December 31, 2024, to 231,403,476 as of December 31, 2025.
• The Trust pays the Sponsor an annual unified fee of 0.25% of its Bitcoin Holdings, which is accrued daily and payable monthly in bitcoin or cash.
• The Sponsor assumes and pays most ordinary expenses incurred by the Trust, excluding taxes and extraordinary expenses.
• Shares are created and redeemed in blocks of 25,000 Shares (Baskets) in exchange for bitcoin or cash.
• Management concluded that the Trust's internal control over financial reporting was effective as of December 31, 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative report due to the significant decline in net assets and NAV per share, driven by bitcoin's price depreciation and substantial unrealized losses, despite positive regulatory developments.

Positives

• The Trust's internal control over financial reporting was deemed effective as of December 31, 2025, as audited by PricewaterhouseCoopers LLP.
• The Sponsor assumes most ordinary operational, administrative, and other expenses, reducing the direct cost burden on the Trust.
• The Trust offers investors a regulated and convenient way to gain exposure to bitcoin through traditional brokerage accounts, mitigating some direct custody and acquisition risks.
• Recent legislative efforts, including the CLARITY Act and GENIUS Act, aim to establish comprehensive federal regulatory frameworks for digital assets and stablecoins, potentially reducing market uncertainty.
• The Trust's use of a volume-weighted median price (VWMP) methodology for NAV calculation is designed to mitigate idiosyncratic market risk and deter manipulation.

Negatives

• Net assets decreased by $1.2 billion, from $18.8 billion to $17.6 billion, during the year ended December 31, 2025.
• The NAV per Share experienced a 6.56% decline in 2025, falling from $81.56 to $76.21.
• The underlying bitcoin price decreased by 6.32% in 2025, impacting the Trust's asset value.
• A net decrease in net assets from operations of $1.6 billion was recorded for 2025.
• The Trust recognized a significant net change in unrealized depreciation on investment in bitcoin of $1.1 billion in 2025.
• Net realized losses from the sale of bitcoin for redemptions amounted to $442.2 million in 2025.
• The digital asset market, including bitcoin, continues to experience extreme volatility, posing a risk of substantial losses for investors.
• Digital asset markets are relatively new, largely unregulated, and susceptible to fraud, manipulation, and security breaches.
• Concentrated ownership of bitcoin by a few large holders could lead to adverse price movements if they engage in large-scale sales.
• The energy-intensive nature of bitcoin mining raises environmental concerns and could lead to regulatory restrictions, potentially affecting bitcoin's price.
• Cybersecurity risks, including 51% attacks, private key loss, and network disruptions, remain a significant threat that could lead to the loss of Trust assets.
• The insolvency or failure of the Custodian or critical banking partners could result in the loss of or delayed access to Trust assets.
• The Trust's investment strategy is concentrated solely in bitcoin, maximizing exposure to its specific market risks without diversification.
• The amount of bitcoin represented by each Share is expected to gradually decline over time due to the payment of Sponsor Fees and other liabilities.
• Service providers, including the Custodian and Index Provider, have limited liability, which could impair the Trust's ability to recover losses.
• Potential conflicts of interest exist between the Sponsor and its affiliates and the Trust and its Shareholders, as the Sponsor may prioritize its own interests.
• Shareholders have limited voting rights and restricted ability to bring derivative actions, potentially hindering their ability to seek redress.

Risks

• The trading prices of digital assets, including bitcoin, have experienced extreme volatility and may continue to do so, potentially leading to a material adverse effect on the value of the Shares.
• The value of the Shares is subject to factors relating to the fundamental investment characteristics of bitcoin as a digital asset, including the fact that digital assets are bearer instruments and loss, theft, destruction, or compromise of private keys could result in permanent loss.
• Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the acceptance of bitcoin.
• Changes in the governance of a digital asset network may not receive sufficient support from users and miners, negatively affecting its ability to grow and respond to challenges.
• If the process of creation and redemption of Baskets encounters unanticipated difficulties, arbitrage transactions intended to keep the Share price linked to bitcoin may not exist, causing the Share price to diverge from NAV.
• The liquidity of the Shares may be affected by the withdrawal of Authorized Participants or bitcoin trading counterparties.
• Security threats to the Trust's account at the Custodian could result in halting Trust operations, loss of assets, or damage to reputation.
• Bitcoin transactions are irrevocable, and stolen or incorrectly transferred bitcoins may be irretrievable, adversely affecting Share value.
• The Index has a limited performance history, the Index price could fail to track the global bitcoin price, and a failure of the Index price could adversely affect the value of the Shares.
• Digital asset markets in the United States exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of bitcoin or the Shares.
• Regulatory changes or interpretations could obligate an Authorized Participant, the Trust, or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary expenses.
• The treatment of digital assets for U.S. federal, state, and local income tax purposes is uncertain.
• Digital asset networks and their software are in early stages of development and dependent on the internet; disruptions or flaws could affect value.
• Forks in digital asset networks could create incompatible versions, new security risks, and affect the Trust's ability to recognize economic benefits.
• The open-source structure of Bitcoin network protocols means developers may lack financial incentive or resources to maintain/develop the network.
• Mathematical or technological advances (e.g., quantum computing) could undermine the Bitcoin network's cryptographic consensus mechanism.
• Bitcoin network faces scaling challenges, and efforts to increase transaction volume may not be successful, leading to higher fees or slower settlement times.
• New competing digital assets or central bank digital currencies (CBDCs) could challenge bitcoin's market position and reduce demand.
• Prices of bitcoin may be affected by stablecoins, their issuers' activities, and regulatory treatment, including risks of de-pegging or insufficient reserves.
• Operational costs for bitcoin mining may exceed block rewards or transaction fees, potentially leading miners to cease operations and reduce network security.
• Miners could collude to raise transaction fees, reducing the attractiveness of the Bitcoin network.
• The Bitcoin network may be used to facilitate illicit activities or evade sanctions, increasing regulatory scrutiny and risk for businesses facilitating bitcoin transactions.
• The Trust's investment strategy is concentrated in a single asset class, maximizing exposure to bitcoin-specific market risks.
• The amount of bitcoin represented by the Shares will decline over time due to the Sponsor Fee and other liabilities.
• The Sponsor may need to find and appoint a replacement custodian quickly, which could pose challenges to the safekeeping of the Trust's bitcoin.
• The Custodian has limited liability for losses, impairing the Trust's ability to recover assets.
• Intellectual property rights claims related to bitcoin or Trust operations could adversely affect the Trust and Share value.
• Unforeseeable risks exist due to the rapidly evolving nature of the bitcoin market and underlying technology.
• The Sponsor's policies and procedures may not fully mitigate the risk of conflicts of interest, including potential insider trading.
• The Index Provider has substantial discretion to change the Index methodology, which could adversely affect performance without considering the Trust's needs.
• The NAV calculation methodology may not always reflect real-time market events or the price at which bitcoin transactions could be readily effected.
• The Exchange may halt trading in the Trust's Shares, adversely impacting Shareholders' ability to sell.
• Shareholders have no right or power to take part in the management of the Trust and have limited voting and distribution rights.
• Creation or redemption orders may be subject to postponement, suspension, or rejection under certain circumstances, affecting arbitrage and potentially causing Shares to trade at premiums/discounts to NAV.
• The ongoing activities of the Trust may generate tax liabilities for Shareholders, even without distributions, and the tax treatment of bitcoin may change retroactively.

Future Outlook

The filing highlights ongoing regulatory uncertainty in digital asset markets, with new legislation (CLARITY Act, GENIUS Act) aiming to establish comprehensive federal frameworks. The SEC Crypto Task Force is also working on a clear regulatory framework. However, the implementation and interpretation of these new laws and the outcomes of ongoing regulatory actions remain uncertain, potentially altering the nature of bitcoin investments or the Trust's operations. The Trust expects the amount of bitcoin represented by Shares to gradually decline over time due to fees and liabilities.

Management Comments

• The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in bitcoin without purchasing, holding and trading bitcoin directly.
• The Sponsor believes that the security procedures that the Sponsor and the Custodian utilize, such as hardware redundancy, segregation and offline data storage (i.e., the maintenance of data on computers and/or storage media that is not directly connected to or accessible from the internet and/or networked with other computers, also known as cold storage) protocols are reasonably designed to safeguard the Trusts bitcoin from theft, loss, destruction or other issues relating to hackers and technological attack.
• The Sponsor is continuing to monitor and evaluate the Trusts risk management processes and policies and believes that the current risk management processes and procedures are reasonably designed and effective.
• 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.

Industry Context

StockSavvy.ai notes that the digital asset industry continues to be characterized by extreme volatility and significant regulatory evolution. The filing reflects the broader market downturn in 2025 for bitcoin, contrasting with the strong appreciation seen in 2024. The introduction of the CLARITY Act and GENIUS Act in 2025 marks a pivotal shift towards federal regulatory frameworks for digital assets and stablecoins in the U.S., aiming to provide clarity amidst previous enforcement actions against major platforms like Coinbase, Binance, and Kraken. This regulatory push, while creating transitional risks, could ultimately foster greater institutional adoption and market maturity, potentially stabilizing the volatile crypto landscape. The ongoing cybersecurity threats, as evidenced by the Bybit exchange hack, underscore the persistent operational risks within the digital asset ecosystem.

Comparison to Industry Standards

• The Trust's 0.25% annual Sponsor Fee is competitive within the nascent spot Bitcoin ETF market, comparable to or lower than some other recently launched Bitcoin ETFs.
• The decline in NAV per Share of 6.56% in 2025 is consistent with the 6.32% decline in the underlying bitcoin price, indicating effective tracking of its benchmark, the Fidelity Bitcoin Reference Rate.
• The Trust's reliance on cold storage custody by Fidelity Digital Assets, N.A., a national trust bank, aligns with best practices for institutional-grade digital asset security, similar to custody solutions employed by other major Bitcoin ETF providers.
• The use of a Volume-Weighted Median Price (VWMP) methodology for NAV calculation is a robust approach to mitigate manipulation, a common concern in less regulated spot markets, and is a standard adopted by several leading crypto indices.

Management Changes

Corporate Governance

Legal Proceedings

• The SEC has filed lawsuits against cryptocurrency exchanges Coinbase, Binance, and Kraken, alleging operation of unlicensed securities exchanges, brokers, and clearing agencies, which could lead to a substantial restructuring of the digital asset market in the United States.
• The U.S. Department of Justice brought criminal charges, including fraud and money laundering, against FTX's former CEO and others, with a conviction in November 2023.
• Similar charges related to anti-money laundering laws were brought against Binance and its former CEO in November 2023.
• The New York Attorney General brought charges against Gemini, Genesis Global Capital, and Digital Currency Group alleging violations related to the Gemini Earn program, with a settlement approved for Genesis entities in May 2024.
• In February 2025, a 60-day stay was granted in the SEC's lawsuit against Binance, and Coinbase and Kraken have reached agreements in principle with the SEC to dismiss their respective lawsuits.

Related Party Transactions

• FD Funds Management LLC (Sponsor), Fidelity Service Company, Inc. (Administrator), Fidelity Digital Assets, N.A. (Custodian), Fidelity Distributors Company LLC (Distributor), and Fidelity Product Services LLC (Index Provider) are all affiliates of FMR LLC.
• The Trust pays the Sponsor an annual unified fee of 0.25% of its Bitcoin Holdings.
• The Sponsor assumes and pays most ordinary expenses of the Trust, including fees for affiliated service providers.
• On December 6, 2024, the Trust purchased all bitcoin assets of Wise Origin Bitcoin Index Fund I, L.P., a Delaware limited partnership managed by the Sponsor, in exchange for 1,453,476 Shares of the Trust with a value of $129,377,662.
• FMR Capital, Inc., an affiliate of the Sponsor, purchased 500,000 Shares for $20,000,000 on January 9, 2024.
• JSCT, LLC, a bitcoin trading counterparty, is an affiliate of Jane Street Capital LLC, an Authorized Participant.
• Virtu Financial Singapore Pte. Ltd., a bitcoin trading counterparty, is an affiliate of Virtu Americas LLC, an Authorized Participant.

Stakeholder Impact

• Shareholders experienced a decrease in NAV per Share and overall investment value due to bitcoin price depreciation and substantial unrealized losses in 2025. They face risks from market volatility, regulatory uncertainty, cybersecurity threats, and have limited voting/derivative rights. They benefit from a regulated and convenient way to access bitcoin exposure.
• The Trust has no employees. The Sponsor's key personnel manage the Trust, and their loss could adversely impact management.
• Customers (investors) are provided with a mechanism to invest in bitcoin through traditional brokerage accounts, avoiding direct custody risks, but are subject to market risks and fees.
• Service providers (Sponsor, Custodian, Administrator, etc.) receive fees for their services and face operational and reputational risks related to digital asset markets and cybersecurity. Their liability to the Trust is limited by contractual agreements.
• Regulatory authorities are actively engaged in developing and enforcing regulations for the digital asset industry, which impacts market structure and participant compliance, potentially leading to new costs or restrictions for the Trust and its service providers.

Next Steps

• The Sponsor will continue to monitor and evaluate the Trust's risk management processes and policies.
• The SEC Crypto Task Force will continue its objective of developing a comprehensive and clear regulatory framework for crypto assets.
• Federal and state regulators will undertake subsequent rulemaking, interagency coordination, and evolving enforcement approaches related to the CLARITY Act and GENIUS Act.
• Core developers may propose future amendments to the Bitcoin network protocols and software.
• The Sponsor may adjust the Share price of the Trust in the future through stock splits or reverse stock splits to maintain convenient trading ranges for Shareholders.

Key Dates

Recommendation

The Fidelity Wise Origin Bitcoin Fund experienced a decline in NAV and bitcoin price in 2025, reflecting the inherent volatility of the digital asset market. While regulatory clarity is emerging with new legislation, significant uncertainties and risks remain. The fund's passive management and concentration in a single asset class mean its performance is directly tied to bitcoin's price movements. Given the current market conditions and the ongoing evolution of the regulatory landscape, a "hold" recommendation is appropriate for investors already exposed to the fund, awaiting further stabilization and clearer long-term trends in both bitcoin's value and the broader digital asset regulatory environment. New investors should exercise caution and consider the high-risk nature of the asset class.

Keywords

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