Tidal Commodities Trust I – Hashdex Bitcoin ETF
Quarter Ended June 30, 2025
Key Financial Metrics
- Total net assets: $14,625,094 as of June 30, 2025 (down from $14,839,385 as of December 31, 2024).
- Net asset value (NAV) per share: $121.88 (up from $106.00 at year-end 2024).
- Market value per share: $121.74 (up from $106.21 at year-end 2024).
- Shares outstanding: 120,000 (down from 140,000 at year-end 2024).
- Bitcoin holdings: 13,487 units, valued at $14,522,529 (99.3% of net assets).
- Cash and cash equivalents: $74,496.
- YTD Total Return: 14.98% for the six months ended June 30, 2025.
- Annualized expense ratio: 0.41% (down from 1.14% in the comparable prior period).
- Net income for six months ended June 30, 2025: $2,252,867 (down from $5,914,717 in prior period).
- Issuance of shares: $2,144,314; Redemption of shares: $(4,611,472) for the six months ended June 30, 2025.
- Realized gain on crypto futures contracts (three months ended June 30, 2025): $(4,173), Net change in unrealized appreciation on investments: $2,915,393.
Risks
- Market Risk: The ETF’s entire net asset value is tied to bitcoin’s price volatility. For the quarter, unrealized gains were a primary driver of performance ($2,915,393), but the Fund’s results could turn negative quickly with adverse market movements.
- Credit Risk: The Fund uses StoneX and Phillip Capital as clearing brokers for futures trades, and while regulated by the CEA with customer protections in place, there remains exposure to counterparty nonperformance, particularly in periods of extreme volatility.
- Regulatory Risk: Management specifically notes that market disruptions—including government actions that disrupt bitcoin markets or restrict the Fund’s trading activities—could adversely affect Fund performance.
- Liquidity Risk: The Fund does not utilize borrowings or credit lines, depending on the liquidity of its bitcoin holdings and cash reserves. Rapid redemptions ($4.6M in the period) or sharp decreases in bitcoin liquidity or price could impact the Fund’s ability to meet obligations.
- Concentration Risk: The Fund invests almost exclusively in bitcoin (99.3% of NAV); diversification is virtually nonexistent, amplifying exposure to bitcoin-specific events, technical vulnerabilities, and sector downturns.
- Operational Risks: As the Fund holds digital assets via a third-party custodian (BitGo Trust), it is subject to potential custodial, technical, and cyber risks affecting access to or safety of assets.
Management Discussion
- Strategic Shift: Following a merger and March 2024 strategy change, the Fund converted from a bitcoin futures strategy to direct spot bitcoin holdings, aiming to better track spot price performance. The new benchmark reflects this direct exposure.
- Performance Drivers: The 14.98% YTD total return was driven primarily by appreciation in bitcoin prices. NAV per share increased from $106.00 to $121.88 during the period. However, net assets declined modestly due to greater share redemptions than issuances.
- Fees and Expenses: The Fund’s management fee is 0.25% per annum, with an all-in annualized expense ratio of 0.41% for the period, reduced from 1.14% a year ago due to cost discipline and scale benefits post-merger. No fee waivers were enacted during the reporting period.
- Shareholder Activity: During H1 2025, the Fund saw redemptions of 40,000 shares and issuances of 20,000 shares, reflecting net outflows in capital despite asset price increases. This resulted in a modest reduction in total outstanding shares.
- Merger and Renaming: The merger with Hashdex Bitcoin Futures ETF and subsequent conversion to spot bitcoin holdings did not materially change the rights of shareholders but shifted the fund’s risk and return profile towards spot bitcoin exposure.
- Expense Allocation: Fund expenses are tightly managed; Sponsor may elect (but did not during the period) to waive or pay certain expenses.
- Internal Controls: Management reports no material changes or deficiencies in internal controls or disclosure procedures.
Investor Summary
The Hashdex Bitcoin ETF is highly exposed to the price movements and market dynamics of bitcoin, with a greater than 99% portfolio allocation to the cryptocurrency. Performance and NAV improvements in H1 2025 were driven by bitcoin appreciation, but capital activity saw net redemptions, reducing outstanding shares. Expenses remain relatively low for a crypto ETF, with further optimization after the strategic shift to spot holdings. However, risks relating to bitcoin market volatility, regulatory interventions, custodial security, and a lack of diversification remain material and should be weighed carefully by investors seeking direct bitcoin exposure in a regulated ETF structure. As of June 30, 2025, the Fund had stable operations with no off-balance sheet financing or legal issues, but remains sensitive to rapid changes in crypto markets.
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