10-Q: Fidelity Bitcoin Fund Sees Strong Q2 Growth

Fidelity Wise Origin Bitcoin Fund reports significant asset growth and NAV increase in Q2 2025, driven by a surge in Bitcoin's price.

Summary

• Total Net Assets increased to $21.58 billion as of June 30, 2025, up from $18.81 billion on December 31, 2024.
• Net Asset Value (NAV) per share rose to $93.55 as of June 30, 2025, compared to $81.56 on December 31, 2024.
• The fund's investment in Bitcoin, at fair value, reached $21.59 billion as of June 30, 2025, from $18.82 billion at the end of 2024.
• Net increase in net assets resulting from operations for the six months ended June 30, 2025, was $2.52 billion, primarily due to $2.78 billion in net change in unrealized appreciation on investment in Bitcoin.
• The price of Bitcoin on the principal market increased by 14.84% from $93,365.36 on December 31, 2024, to $107,221.67 on June 30, 2025.
• Shares outstanding slightly increased to 230,728,476 as of June 30, 2025, from 230,678,476 on December 31, 2024.
• The quantity of Bitcoin held by the Trust decreased slightly from 201,556 on December 31, 2024, to 201,347 on June 30, 2025, due to transfers for Sponsor fees and redemptions exceeding purchases.

Sentiment

Score: 8

Explanation: The fund demonstrated strong financial performance, with significant growth in net assets and NAV per share, effectively tracking the appreciation of Bitcoin. While subject to Bitcoin's inherent volatility, the operational aspects appear sound, and the fund is fulfilling its objective.

Positives

• Total Net Assets grew by approximately $2.77 billion in the six months ended June 30, 2025, reflecting strong investor interest and Bitcoin price appreciation.
• Net Asset Value per share increased by 14.70% for the six months ended June 30, 2025, demonstrating effective tracking of Bitcoin's performance.
• The fund recorded a net increase in net assets from operations of $2.52 billion for the six months ended June 30, 2025, driven by significant unrealized appreciation of Bitcoin.
• The fund's disclosure controls and procedures were evaluated and determined to be effective as of the end of the reporting period.

Negatives

• Net investment loss of $24.10 million for the six months ended June 30, 2025, primarily due to Sponsor fees.
• Net realized loss of $235.84 million on investment in Bitcoin sold for redemptions during the six months ended June 30, 2025.
• The quantity of Bitcoin owned by the Trust decreased slightly over the six-month period due to redemptions and transfers for Sponsor fees.

Risks

• The fund's investment strategy is concentrated solely in Bitcoin, maximizing exposure to its market risks and volatility.
• Losses from a decrease in Bitcoin's value will not be offset by gains from diversified assets.
• The price of Bitcoin is highly volatile and difficult to predict.
• Market movements of Bitcoin can be influenced by government regulation, security breaches, and global political and economic uncertainties.

Future Outlook

The fund's future performance is inherently tied to movements in the digital asset markets, particularly Bitcoin. While the fund aims to track Bitcoin's performance, actual results may differ due to various risks including changes in laws or regulations, general economic conditions, and other global developments. The Sponsor does not undertake an obligation to update forward-looking statements.

Management Comments

• The fund's investment objective is to seek to track the performance of Bitcoin, as measured by the Fidelity Bitcoin Reference Rate, adjusted for expenses and liabilities.
• The fund is passively managed and does not pursue active management investment strategies, invest in derivatives, or loan or pledge its assets.
• 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 fund continuously offers Baskets of Shares to Authorized Participants in exchange for cash, and the number of outstanding Shares is expected to fluctuate with issuances and redemptions.

Industry Context

The filing highlights the fund's role as a spot Bitcoin ETF, a relatively new and significant development in the digital asset space. Its performance is directly tied to the volatile nature of Bitcoin, reflecting broader market sentiment and adoption trends for cryptocurrencies. The fund offers a regulated and accessible way for investors to gain exposure to Bitcoin without direct ownership complexities, contributing to the institutionalization of digital asset investments.

Comparison to Industry Standards

• The fund's objective is to track the performance of Bitcoin. For the six months ended June 30, 2025, the fund's Total Return at Net Asset Value was 14.70%, and at Market Value was 15.21%. During the same period, the price of Bitcoin, as measured by the principal market, rose 14.84% (from $93,365.36 on December 31, 2024, to $107,221.67 on June 30, 2025). This demonstrates effective tracking of its underlying asset.
• Other comparable products include other spot Bitcoin ETFs such as BlackRock's iShares Bitcoin Trust (IBIT) and Ark 21Shares Bitcoin ETF (ARKB), which also aim to closely track Bitcoin's price movements.
• The fund's expense ratio of 0.25% (after the waiver ended on July 31, 2024) is competitive within the spot Bitcoin ETF market, aligning with industry standards for such passively managed products.

Corporate Governance

Related Party Transactions

• Fidelity Service Company, Inc., an affiliate of the Sponsor, serves as the Administrator, with all related fees and expenses borne by the Sponsor.
• Fidelity Digital Asset Services, LLC, an affiliate of the Sponsor, serves as the Bitcoin Custodian, with all related fees and expenses borne by the Sponsor.
• Fidelity Distributors Company LLC, an affiliate of the Sponsor, serves as the Distributor, with all related fees and expenses borne by the Sponsor.
• Fidelity Product Services LLC, an affiliate of the Sponsor, serves as the Index Provider, with all related fees and expenses borne by the Sponsor.
• The Sponsor receives a unified fee of 0.25% of the Trust's Bitcoin Holdings, which accrues daily and is payable monthly in Bitcoin or cash.

Stakeholder Impact

• Shareholders: Directly impacted by the appreciation or depreciation of Bitcoin, as the fund's value closely tracks Bitcoin's price. Benefit from a regulated and accessible investment vehicle for Bitcoin exposure.
• Sponsor (FD Funds Management LLC): Benefits from the Sponsor fee (0.25% of Bitcoin Holdings) and assumes most operational expenses, aligning its interests with the fund's growth.
• Service Providers (Fidelity affiliates): Receive fees for administrative, custodial, distribution, and index services, which are covered by the Sponsor.

Next Steps

• The fund will continue its passive management strategy, tracking the performance of Bitcoin as measured by the Fidelity Bitcoin Reference Rate.
• Ongoing issuance and redemption of Baskets of Shares with Authorized Participants will continue to manage the fund's capital.

Key Dates

Recommendation

The fund is a passively managed Bitcoin ETF designed to track the performance of Bitcoin. The filing demonstrates that the fund has effectively achieved its objective, with its NAV and market value closely mirroring Bitcoin's price appreciation during the reporting period. For investors seeking exposure to Bitcoin through a regulated and transparent vehicle, the fund continues to perform as expected. A 'hold' recommendation is appropriate for existing investors who maintain a long-term bullish outlook on Bitcoin, as the fund reliably reflects the underlying asset's movements. New investors considering Bitcoin exposure may find this fund a suitable option, contingent on their individual risk tolerance and outlook on Bitcoin's future price.

Keywords

Bitcoin, ETF, Cryptocurrency, Digital Assets, Fidelity, FBTC, Investment Fund, SEC Filing, Quarterly Report