10-Q: Fidelity Bitcoin Fund Sees Net Asset Drop Amidst Bitcoin Price Decline

The Fidelity Wise Origin Bitcoin Fund reported a significant decrease in net assets and NAV per share for the quarter ended June 30, 2026, primarily due to a sharp decline in bitcoin's market price and increased share redemptions.

Summary

• The Fidelity Wise Origin Bitcoin Fund experienced a substantial decrease in net assets, falling from approximately $12.8 billion to $10.3 billion during the three months ended June 30, 2026.
• This decline was driven by a 13.25% decrease in the price of bitcoin, which fell from $68,129.64 to $59,101.49, and a net decrease in outstanding shares.
• The Net Asset Value (NAV) per Share decreased by 13.30% from $59.33 to $51.44 over the same period.
• The quantity of bitcoin held by the fund decreased from 188,144 to 174,383, attributed to bitcoin used for sponsor fees and share redemptions.
• For the six-month period ended June 30, 2026, net assets decreased from $17.6 billion to $10.3 billion, with NAV per share declining by 32.50%.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to the significant decrease in Net Assets and Net Asset Value per Share, driven by a substantial decline in the price of bitcoin and increased redemptions.

Positives

• The fund's investment objective is to track the performance of bitcoin, adjusted for expenses.
• The Sponsor covers most of the Trust's operating expenses, including administrator, custodian, and index provider fees.
• The fund utilizes a passive management strategy, avoiding leverage or derivatives.
• The Sponsor has established a Valuation and Liquidity Committee to ensure fair valuation of assets.

Negatives

• Net assets decreased by $2.5 billion in the quarter ended June 30, 2026, and by $7.3 billion in the six months ended June 30, 2026.
• NAV per Share decreased by 13.30% in the quarter and 32.50% in the six-month period.
• The net change in unrealized depreciation on investment in bitcoin was $1.9 billion for the quarter and $5.7 billion for the six-month period.
• There was a net realized loss of $0.1 billion from the sale of bitcoin for redemptions in the quarter and $0.2 billion in the six-month period.
• The quantity of bitcoin held decreased by 13,761 units during the quarter.

Risks

• The Trust's investment strategy is concentrated in a single asset (bitcoin), maximizing exposure to market risks associated with bitcoin and digital assets.
• Losses resulting from a decrease in bitcoin's value are not offset by gains from diversified assets.
• The price of bitcoin is volatile and market movements are difficult to predict.
• Potential risks include government regulation, security breaches at service providers, and global political/economic uncertainties.

Future Outlook

The filing does not provide specific forward-looking guidance on future performance but discusses the Trust's objective to track bitcoin's performance and the factors influencing its NAV, such as bitcoin price volatility and share redemptions.

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 does not make forward-looking statements unless it believes it has a reasonable basis for doing so, but cannot guarantee their accuracy.
• The Sponsor endeavors to minimize the Trusts holdings of assets other than bitcoin.

Industry Context

StockSavvy.ai notes that this filing reflects the inherent volatility and market risks associated with direct bitcoin investment vehicles. The significant decrease in NAV is directly correlated with the observed downturn in bitcoin's price during the period, a trend impacting many cryptocurrency-focused funds.

Comparison to Industry Standards

• The Fidelity Wise Origin Bitcoin Fund aims to track the Fidelity Bitcoin Reference Rate (Index), which uses a volume-weighted median price methodology across multiple bitcoin spot markets.
• The fund's NAV per share is calculated based on the fair value of its bitcoin holdings, adjusted for expenses.
• Competitors in the spot Bitcoin ETF space, such as BlackRock's IBIT and Ark 21Shares' ARKB, also aim to track bitcoin's price, with performance generally mirroring bitcoin's market movements and subject to similar expense ratios and tracking differences.

Legal Proceedings

• None.

Related Party Transactions

• Fidelity Service Company, Inc. (affiliate of Sponsor) serves as Administrator.
• Fidelity Digital Assets, N.A. (affiliate of Sponsor) serves as Custodian.
• Fidelity Distributors Company LLC (affiliate of Sponsor) serves as Distributor.
• Fidelity Product Services LLC (affiliate of Sponsor) provides Index Services.

Stakeholder Impact

• Shareholders experienced a significant decrease in the value of their investment due to the decline in bitcoin's price and the fund's NAV.
• The Sponsor continues to bear most of the Trust's expenses, which benefits shareholders by reducing direct cost burdens.
• Authorized Participants are involved in the creation and redemption of Baskets, impacting the fund's share count and liquidity.

Next Steps

• The Trust will continue to operate under its investment objective to track the performance of bitcoin.
• The Sponsor will continue to manage the Trust, covering most expenses.
• The Trust will continue to issue and redeem Shares with Authorized Participants in exchange for bitcoin or cash.

Key Dates

Recommendation

The filing indicates a significant decline in the fund's Net Assets and NAV per share, directly tied to the volatility of bitcoin. While the Sponsor covers operational expenses, the core investment performance is dictated by the underlying asset's price. For investors already holding the fund, a 'hold' recommendation is appropriate given the direct correlation to bitcoin's price movements, which can be unpredictable. New investors should carefully consider the risks associated with bitcoin volatility before investing.

Keywords

Bitcoin Fund, Exchange Traded Product, Digital Assets, Cryptocurrency, NAV, Sponsor Fee, Investment Objective, Market Risk