10-K: WisdomTree Bitcoin Fund Reports 2025 Performance Decline

WisdomTree Bitcoin Fund's 2025 annual report reveals a net decrease in assets due to bitcoin price depreciation, despite strong gains in the prior year.

Summary

• The Trust is an exchange-traded fund (ETF) listed on Cboe BZX Exchange, Inc. under the ticker symbol BTCW, which commenced trading on January 11, 2024.
• Its investment objective is to gain exposure to the price of bitcoin, less expenses and liabilities of the Trust's operations, by holding bitcoin and valuing shares daily based on the CME CF Bitcoin Reference Rate New York Variant.
• Net assets decreased significantly from $360,517,232 at December 31, 2024, to $139,686,992 at December 31, 2025.
• The Trust reported a net investment loss of $(515,401) for the fiscal year ended December 31, 2025, compared to $(290,625) for the fiscal year ended December 31, 2024.
• A net realized and unrealized loss on investment in bitcoin of $(36,154,047) was recorded for FY2025, primarily due to a net decrease in unrealized appreciation of $(94,408,359).
• This loss was driven by bitcoin price depreciation from $93,358.58 per bitcoin as of December 31, 2024, to $87,418.55 per bitcoin as of December 31, 2025.
• The total return (based on NAV per Share) for FY2025 was (6.59)%.
• In contrast, for FY2024, net assets increased to $360,517,232, with a total return of 98.08%, driven by bitcoin price appreciation from $46,411.68 (January 10, 2024) to $93,358.58 (December 31, 2024).
• The Sponsor Fee is 0.25% per annum of the Trust's average daily net assets; a waiver on the first $1 billion of assets expired on July 11, 2024.
• The Trust sells bitcoin to cover the Sponsor Fee and any non-assumed expenses, leading to a decrease in the amount of bitcoin represented by each Share over time.
• As of February 28, 2026, the Trust had 1,825,000 shares outstanding.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing negatively due to significant declines in net assets, bitcoin value, and total return in 2025, indicating a challenging market environment for the Trust despite some positive regulatory developments.

Positives

• The Trust experienced strong performance in FY2024 with a 98.08% total return based on NAV per Share, driven by significant bitcoin price appreciation.
• The Sponsor covers most administrative and operational expenses, including Trustee, Administrator, Custodian, Exchange listing, SEC registration, printing, mailing, tax reporting, audit, license, and ordinary legal fees, reducing the direct cost burden on the Trust.
• The Trust utilizes robust cybersecurity measures aligned with industry standards, overseen by WisdomTree Inc.'s Chief Information Officer and Audit Committee, designed to protect customer data.
• Mid-2025 saw improving risk appetite and renewed institutional demand for ETPs, supported by Federal Reserve rate cuts and positive U.S. legislative developments.
• Recent U.S. legislative progress, including the CLARITY Act, GENIUS Act, and Anti-CBDC Surveillance Act, along with an executive order permitting crypto in retirement accounts, served as tailwinds for digital assets.
• The SEC established a new Crypto Task Force to provide regulatory clarity and dismissed or paused ongoing enforcement actions against major digital asset platforms in Q1 2025, signaling a potentially more favorable regulatory environment.
• A D.C. Circuit Court decision finding the SEC's denial of the Grayscale Bitcoin Trust's listing arbitrary and capricious led to an immediate increase in bitcoin's price.

Negatives

• Net assets decreased by $(220,830,240) for the fiscal year ended December 31, 2025.
• The Trust incurred a net investment loss of $(515,401) for FY2025.
• A net realized and unrealized loss on investment in bitcoin of $(36,154,047) was recorded for FY2025, primarily due to bitcoin price depreciation.
• The total return (based on NAV per Share) for FY2025 was negative (6.59)%.
• Bitcoin's price depreciated from $93,358.58 on December 31, 2024, to $87,418.55 on December 31, 2025.
• The market value per Share decreased from $98.65 to $92.68 in FY2025, with a low of $81.29 (-17.60%) on April 8, 2025.
• The fourth quarter of 2025 experienced a broad risk-off environment, hawkish Federal Reserve signals, a U.S. government shutdown, widespread forced liquidations of leveraged positions, and technical breakdowns in bitcoin's price.
• Spot crypto ETPs posted record outflows in November 2025, and the Crypto Fear & Greed Index plunged into extreme fear.
• The Trust is a passive investment vehicle and does not actively manage its bitcoin holdings to mitigate price volatility, meaning it is fully exposed to market downturns.
• The amount of bitcoin represented by Shares will continuously decline over time due to the payment of the Sponsor Fee and other expenses.
• As an emerging growth company, the Trust benefits from reduced disclosure requirements, which may make its Shares less attractive to some investors.
• The Sponsor is leanly staffed and relies heavily on key personnel, posing a risk if these individuals depart or are unable to fulfill their responsibilities.
• The Trust is new, and if it fails to attract or retain sufficient assets, it could be terminated and liquidated at a disadvantageous time for Shareholders.
• Shareholders have limited voting and distribution rights, reducing their influence over Trust operations.
• Coinbase, serving as both Bitcoin Custodian and Prime Execution Agent, also provides services to several competing exchange-traded bitcoin products, potentially creating conflicts of interest.
• Authorized Participants also serve competing products, which could adversely affect the liquidity and market price of the Trust's Shares.
• The Sponsor's continued services are not guaranteed, and any discontinuance could be detrimental to the Trust's operations.
• Creation and redemption orders are subject to postponement, suspension, or rejection under certain circumstances, impacting liquidity and arbitrage efficiency.
• The NAV calculation may be subject to overstatement or understatement due to the valuation method employed, potentially leading to discrepancies with actual market prices.
• The liability of the Sponsor and the Trustee is limited, meaning the Trust may be required to indemnify them, potentially reducing the Trust's bitcoin holdings.
• Extraordinary expenses, not assumed by the Sponsor, are borne by the Trust through the sale of bitcoin, further reducing the bitcoin per Share.
• Third parties may assert intellectual property rights claims, leading to significant costs or forcing the Trust's termination.
• The Trust is susceptible to operational and information security risks from intentional and unintentional cyber-attacks.
• The Trust Agreement restricts the right of beneficial owners to bring derivative actions, requiring a collective holding of at least 10% of outstanding Shares by unaffiliated parties.
• Pandemics and other public health crises could have a material adverse effect on the Trust's business and financial condition.

Risks

• Extreme volatility in bitcoin prices, including potential steep declines, could materially adversely affect the value of the Shares.
• Evolving U.S. and foreign regulations may restrict bitcoin use or impact demand, potentially leading to the termination and liquidation of the Trust.
• Loss or destruction of private keys, including by the Bitcoin Custodian, could prevent the Trust from accessing its bitcoin, leading to irreversible loss.
• Bitcoin transactions are irrevocable, and stolen or incorrectly transferred bitcoin may be irretrievable, adversely affecting the Trust's investment.
• Lack of full insurance and limited legal recourse against the Trust and its service providers expose the Trust and Shareholders to the risk of loss of bitcoin for which no entity is liable.
• Loss of a critical banking relationship for, or the failure of a bank used by, the Trust could adversely impact its ability to operate or cause losses.
• The Reference Rate has a limited history and may not accurately track the global bitcoin price, or could experience system failures/errors, affecting Share value.
• The Trust's return will likely not match bitcoin's performance due to operating expenses, and the amount of bitcoin represented by Shares will decline over time.
• The NAV of the Trust may not always correspond to the market price of its Shares or the global price of bitcoin due to various factors, including price volatility and trading activity.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust, as the Sponsor's fiduciary duties are limited by the Trust Agreement.
• The value of Shares depends on the development and acceptance of the Bitcoin network; slowing or stopping development could adversely affect the investment.
• A disruption of the internet may affect the operation of the Bitcoin network, adversely impacting the bitcoin industry and the Trust.
• Potential amendments to the Bitcoin network's protocols and software could, if accepted, adversely affect the investment.
• The open-source structure of the Bitcoin network protocol means developers are generally not directly compensated, potentially leading to inadequate maintenance or development.
• A temporary or permanent fork of the Bitcoin Blockchain could adversely affect an investment in the Trust or its ability to operate.
• The Bitcoin Blockchain could be vulnerable to a 51% attack, which could adversely affect an investment in the Trust or its ability to operate.
• Transacting in bitcoin is subject to illicit financing risk, including manipulation and fraud, which could adversely affect bitcoin's price.
• If miners expend less processing power on the Bitcoin network, it could increase the likelihood of a malicious actor obtaining control.
• Blockchain technologies are based on theoretical conjectures that may become incorrect due to technological advances, such as quantum computing, potentially leading to market collapse.
• Banks and other established financial institutions may refuse to process funds for bitcoin transactions, dampening liquidity and damaging public perception.
• The price of bitcoin on the bitcoin market has exhibited periods of extreme volatility, which could negatively impact the Trust's performance.
• Bitcoin's price may become closely correlated with other asset classes, reducing diversification benefits.
• Prices of bitcoin may be affected due to stablecoins, the activities of stablecoin issuers, and their regulatory treatment.
• Currently, there is relatively small use of bitcoin in the retail and commercial marketplace compared to speculative use, contributing to price volatility.
• Bitcoin platforms are relatively new and, in some cases, unregulated, making them more exposed to fraud, manipulation, and security breaches.
• Sales of new bitcoin may cause the price of bitcoin to decline, negatively affecting the Trust's investment.
• Digital asset networks face significant scaling challenges, and efforts to increase transaction volume may not be successful, leading to increased fees and settlement times.
• The Bitcoin network's decentralized governance structure may negatively affect its ability to grow and respond to challenges.
• New competing digital assets, central bank digital currencies (CBDCs), and other initiatives may pose a challenge to bitcoin's market position.
• The scheduled mining of additional bitcoin and their subsequent sale may cause the price of bitcoin to decline.
• Miners could act in collusion to raise transaction fees, which may adversely affect the usage of the Bitcoin network.
• Miners may be unable to acquire necessary digital asset mining hardware, leading to a decline in the mining population.
• Bitcoin mining is energy intensive, and concerns about climate change may raise its economic and societal costs.
• The Reference Rate may be affected by momentum pricing due to speculation, leading to greater volatility.
• The Benchmark Administrator could experience system failures or errors, delaying calculation and dissemination of the Reference Rate.
• The Reference Rate could fail to track the global bitcoin price, reducing investor confidence.
• The Sponsor can discontinue using the Reference Rate and use a different pricing or valuation methodology, potentially affecting Share value.
• The Sponsor and its management have no meaningful history of operating an investment vehicle like the Trust within the United States, potentially leading to inadequate management.
• The Trust is a passive investment vehicle and will be affected by a general decline in the price of bitcoin.
• The value of the Shares may be influenced by factors unrelated to the value of bitcoin, such as operational problems or service provider failures.
• The Shares are a relatively new securities product, and unanticipated problems with operations or trading may arise.
• The Trust is subject to market risk, including the possible loss of the entire principal of the investment.
• The NAV may not always correspond to the market price of bitcoin, and Baskets may be created or redeemed at a different value.
• Purchasing activity in the bitcoin platform market associated with Basket creations or selling activity following Basket redemptions may affect the Reference Rate and Share trading prices.
• The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect Share liquidity.
• The market for exchange-traded bitcoin futures has limited trading history and operational experience and may be less liquid and more volatile.
• Arbitrage transactions intended to keep the price of Shares linked to bitcoin may be problematic if creation/redemption processes become difficult or if Authorized Participants encounter difficulties.
• The use of cash creations and redemptions, as opposed to in-kind, may adversely affect arbitrage transactions and cause the price of Shares to diverge from NAV.
• The Trust is subject to risks due to its concentration of investments in a single asset class (bitcoin).
• If Trade Credits are not available or become exhausted, the Trust may face delays in buying or selling bitcoin; failure to repay Trade Credits on time could lead to asset liquidation.
• The loss or failure of any Connected Trading Venues used by the Prime Execution Agent may adversely affect its business and cause losses for the Trust.
• The lack of active trading markets for the Shares may result in losses on Shareholders' investments at the time of disposition.
• The Trust's ability to achieve its investment objective on a consistent basis may be affected by several factors.
• The development and commercialization of the Trust is subject to competitive pressures from other bitcoin investment products.
• The Exchange may halt trading in the Trust's Shares, adversely impacting a Shareholder's ability to sell.
• The market infrastructure of the bitcoin spot market could result in the absence of active Authorized Participants.
• Bitcoin platforms are not subject to the same regulatory oversight as traditional equity exchanges, impacting Authorized Participants' arbitrage mechanisms.
• Shareholders that are not Authorized Participants may only purchase or sell Shares in secondary trading markets, subject to associated conditions and operational risks.
• The Sponsor is leanly staffed and relies heavily on key personnel, posing a risk if they leave or are unable to carry out responsibilities.
• The Trust is new, and if not profitable, may terminate and liquidate at a disadvantageous time.
• Shareholders may be adversely affected by redemption or creation orders that are subject to postponement, suspension, or rejection.
• Shareholders do not have the rights enjoyed by investors in certain other vehicles and may be adversely affected by a lack of statutory rights and limited voting/distribution rights.
• The Trust may be adversely affected by competition from other ETFs focused on bitcoin.
• Coinbase serves as the bitcoin custodian and prime execution agent for several competing products, which could adversely affect the Trust's operations.
• Authorized Participants serve in a similar capacity for several competing products, which could adversely affect the value or availability of the Shares.
• Shareholders cannot be assured of the Sponsor's continued services, the discontinuance of which may be detrimental to the Trust.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor, Trustee, or other service providers.
• Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares.
• Third parties may infringe upon or otherwise violate intellectual property rights or assert that the Sponsor has infringed, resulting in significant costs.
• Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks.
• The Trust and its service providers are subject to certain operational risks from human error, processing errors, or system failures.
• The Trust Agreement includes a provision that restricts the right of a beneficial owner of a statutory trust from bringing a derivative action.
• Pandemics and other public health crises could have a material adverse effect on the Trust's business and financial condition.

Future Outlook

The U.S. presidential administration has indicated a commitment to strengthening U.S. leadership in the digital assets space, with an interagency working group tasked with proposing a regulatory framework in early 2025. The GENIUS Act, establishing a federal regulatory framework for stablecoins, was passed in July 2025. The SEC's new Crypto Task Force aims to develop a comprehensive and clear regulatory framework for digital assets and has paused enforcement actions against major digital asset platforms. The next Bitcoin halving event is anticipated between March 2028 and May 2028, which could impact mining incentives and bitcoin supply dynamics.

Management Comments

• The Sponsor believes that the Reference Rate will be reflective of a reasonable valuation of the average spot price of bitcoin.
• The Sponsor does not anticipate that the need to fair value bitcoin will be a common occurrence.
• The Sponsor reserves the right to replace the Reference Rate with another valuation methodology which it believes will accurately track the price of bitcoin.
• The Sponsor believes that its Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations.

Industry Context

StockSavvy.ai notes that the digital asset market, particularly bitcoin, remains highly volatile and sentiment-driven, lacking established frameworks for fundamental analysis. The regulatory landscape is evolving rapidly, with recent U.S. legislative and executive actions indicating a move towards clearer frameworks, which could be a significant tailwind. However, the industry continues to face challenges from security breaches (e.g., Bybit hack), insolvencies (e.g., FTX, BlockFi), and macroeconomic factors, which can lead to sharp price declines and investor outflows. Competition from other digital assets and potential central bank digital currencies (CBDCs) also poses a long-term challenge to bitcoin's market position. The concentration of custody and prime execution services with Coinbase for multiple competing products highlights a potential systemic risk within the crypto ETF ecosystem.

Comparison to Industry Standards

• The Trust's investment objective to gain exposure to the price of bitcoin is consistent with other spot bitcoin ETFs in the market.
• The Reference Rate used by the Trust employs a methodology substantially similar to the CME CF Bitcoin Reference Rate (BRR), which is a widely recognized benchmark for bitcoin futures contracts.
• The Bitcoin Custodian maintains a commercial crime insurance policy of $320 million, which is shared among all its customers, a common practice among institutional crypto custodians, but may not be sufficient to cover all potential losses for the Trust.
• The Bitcoin Custodian's liability is contractually limited to $100 million for each cold storage address, a specific limitation that may not fully cover the Trust's assets in a loss event.
• The Trust's Sponsor Fee of 0.25% per annum is competitive within the spot bitcoin ETF market, though some competitors have offered lower fees, particularly for initial market acceptance.
• The Trust's use of cash creations and redemptions, as opposed to in-kind, introduces unique operational complexities and risks related to trade credits and potential price deviations from NAV, differentiating it from some other commodity-based ETFs.

Management Changes

Corporate Governance

Legal Proceedings

• No legal or administrative proceedings have been instituted or threatened against the Trust itself.
• The filing highlights risks of potential criminal or civil lawsuits against businesses facilitating bitcoin transactions if used for illicit activities.
• Past enforcement actions by the SEC and CFTC against digital asset issuers and trading platforms are noted as industry risks.

Related Party Transactions

• WisdomTree, Inc., the parent of the Sponsor, acted as a seed investor, purchasing 50,000 Shares for $2,500,000 in December 2023 and January 2024, and subsequently selling them for $5,637,003 on December 16, 2024.
• Coinbase Custody Trust Company LLC (Bitcoin Custodian) and Coinbase Inc. (Prime Execution Agent) are affiliates, creating potential conflicts of interest in their services to the Trust.
• Coinbase Credit, Inc. (Trade Credit Lender) is an affiliate, providing short-term Trade Credits to the Trust, secured by the Trust's assets in the Trading Balance and Vault Balance.
• The Sponsor and its affiliates, including their directors, officers, and employees, may trade in bitcoin, cryptocurrency, derivative, or other markets for their own accounts and for clients, potentially taking positions opposite to the Trust or competing for market positions, which could create conflicts of interest.

Stakeholder Impact

• **Shareholders**: Directly impacted by the significant decline in net assets and negative total return in 2025, bitcoin price volatility, and the gradual reduction of bitcoin per share due to fees. They also face limited legal recourse and potential trading at premiums/discounts to NAV.
• **Authorized Participants**: Bear transaction costs and are responsible for price differences in creation/redemption. Their ability to hedge exposure and efficiently participate in creation/redemption processes is critical to the Trust's market efficiency.
• **Sponsor (WisdomTree Digital Commodity Services, LLC)**: Receives the Sponsor Fee but is also responsible for covering most administrative expenses. Its reputation and financial performance are tied to the Trust's success and competitive positioning.
• **Service Providers (BNY Mellon, Coinbase entities)**: Provide essential custody, administration, transfer agency, and prime execution services. Their operational stability, security, and adherence to contractual terms are crucial, though their liability is limited by agreement.
• **Regulators**: The evolving regulatory landscape, including new legislation and task forces, directly impacts the operational framework and compliance requirements for the Trust and the broader digital asset industry.

Next Steps

• An interagency working group is tasked with proposing a regulatory framework governing the issuance and operation of digital assets in the United States in early 2025.
• The SEC's new Crypto Task Force is focused on providing clarity on the application of federal securities laws to digital assets and establishing an appropriate regulatory framework.
• The next Bitcoin halving event is anticipated to occur at some point between March 2028 to May 2028.
• BNY Mellon will provide SOC 1 reports (or comparable successor reports) by independent public accountants on its system, relating to the services provided.
• BNY Mellon will engage a third-party provider to perform penetration testing of its systems used to provide services and provide confirmation upon request.
• BNY Mellon will maintain and periodically test business continuity and disaster recovery plans designed to minimize service interruptions and ensure system recovery.

Key Dates

Recommendation

The Trust experienced a significant decline in net assets and a negative total return in 2025, driven by bitcoin price depreciation and substantial outflows. While there are positive regulatory developments, the inherent volatility of bitcoin, coupled with operational risks, limited shareholder recourse, and potential conflicts of interest with key service providers, suggests a high-risk investment with recent underperformance. The substantial decrease in shares outstanding and net assets indicates a lack of sustained investor confidence.

Keywords

Bitcoin, BTCW, ETF, Cryptocurrency, Digital Assets, WisdomTree, SEC Filing, 10-K, Financial Report, Custody, Coinbase, BNY Mellon, Market Volatility, Regulation, Blockchain, Spot Price, Investment Fund, Net Assets, Financial Performance