Bitwise 10 Crypto Index ETF Annual Report - Your Essential Guide

Welcome to your straightforward guide on the Bitwise 10 Crypto Index ETF (BITW) and its performance for the fiscal year ended December 31, 2025. We've sifted through the details to give you a clear picture of how this crypto investment vehicle fared, what drives its value, and what you should know as an investor.

Key Highlights for the Fiscal Year Ended December 31, 2025

1. Business Overview: What is the Bitwise 10 Crypto Index ETF and How Did It Perform?

The Bitwise 10 Crypto Index ETF (BITW) offers investors a simple way to gain exposure to the largest and most established cryptocurrencies. It aims to track the performance of the Bitwise 10 Large Cap Crypto Index, a basket of the top 10 cryptocurrencies by market capitalization, weighted by their free-float (the amount available for public trading). This means you invest in a diversified portfolio of major digital assets like Bitcoin and Ethereum, without needing to buy them individually. BITW trades on the NYSE Arca exchange.

For the fiscal year ending December 31, 2025, the ETF's asset base grew significantly, reflecting strong investor interest and potentially positive market movements. The fund aims to mirror its underlying index.

2. Financial Performance and Key Metrics

Unlike an operating company, an ETF doesn't generate traditional revenue or profit. Instead, we measure its financial performance and health by its Assets Under Management (AUM), expense ratio, and liquidity.

• Size and Scale: As of December 31, 2025, the ETF managed a substantial amount of AUM. This size, along with its SEC classifications as a "large accelerated filer" and "well-known seasoned issuer," demonstrates a well-established, transparent fund with significant market presence. (A "large accelerated filer" has a public float of $700 million or more and has met SEC reporting requirements for at least 12 months, indicating robust reporting standards.)
• Shares Outstanding: The fund had approximately 15.8 million shares outstanding as of February 27, 2026.
• Expense Ratio: A critical factor for investors is the expense ratio, which represents the annual fee the fund charges.
• Custody: Coinbase Custody Trust Company, LLC, securely stores the fund's crypto assets, acting as its custodian.

3. Management Discussion and Analysis (MD&A) and Financial Health

Management offers its perspective on the fund's financial health, operational results, liquidity, and capital resources for the fiscal year ended December 31, 2025.

Results of Operations and Key Developments:

• Major Wins:
  • Significant AUM Growth: The fund saw a notable increase in its Assets Under Management, reflecting growing investor confidence and adoption of crypto as an asset class. This growth positively contributed to the fund's overall scale and operational stability.
  • Market Acceptance: Its continued trading on NYSE Arca and classification as a "well-known seasoned issuer" underscore its integration into mainstream financial markets, boosting visibility and accessibility for investors.
  • Index Performance: The fund's performance generally tracked that of its underlying index, fulfilling its investment objective.
• Challenges:
  • Crypto Market Volatility: The inherent volatility of cryptocurrencies remained a primary challenge, leading to significant price swings that directly impacted the fund's Net Asset Value (NAV) throughout the year. Managing investor expectations amidst these fluctuations remains a key focus.
  • Regulatory Uncertainty: The evolving regulatory landscape for digital assets posed ongoing challenges, with potential new rules creating uncertainty for the market and the fund's operations. The fund actively monitors these developments to assess potential impacts.
  • Competition: A growing number of crypto investment products increased market competition, requiring continuous efforts to maintain the fund's competitive edge and investor appeal.
• Expense Management: The fund's expense ratio, as disclosed, represents the cost of operating the ETF. Management continually reviews operational efficiencies to ensure expenses are managed prudently while maintaining the quality of services, including custody and administration. These expenses directly reflect in the fund's net asset value.

Financial Condition, Liquidity, and Capital Resources:

• Capital Resources: The fund's Assets Under Management (AUM), consisting of the underlying cryptocurrencies held in custody, primarily represent its capital resources. As of December 31, 2025, the fund's substantial AUM provides a robust capital base for its operations.
• Liquidity: The Bitwise 10 Crypto Index ETF maintains liquidity primarily through its creation and redemption mechanism. Authorized Participants (APs) can create or redeem large blocks of shares (creation units) in exchange for the underlying cryptocurrencies or cash equivalents. This mechanism helps keep the ETF's market price closely aligned with its Net Asset Value (NAV) and provides liquidity to investors. The fund's liquidity also depends on the liquidity of the underlying crypto assets in the spot markets.
• Debt: The fund does not engage in borrowing or maintain any significant debt obligations. Its asset base and expense ratio fund its operations.
• Cash Management: The fund may hold a limited amount of cash for operational purposes, such as paying expenses. We typically manage any significant cash holdings to minimize tracking error against the index.
• Asset Valuation: We calculate the fund's Net Asset Value (NAV) daily based on the fair value of its underlying cryptocurrency holdings. The fund's administrator determines the valuation methodology, which typically involves using prices from various cryptocurrency exchanges and adjusting for factors like liquidity and market depth, in accordance with established policies. This critical accounting policy ensures the fund's reported value accurately reflects the market value of its assets.

Leadership and Strategy:

For the fiscal year ended December 31, 2025, Bitwise Investment Advisers, LLC reported no significant changes to its core leadership team or the Bitwise 10 Crypto Index ETF's fundamental investment strategy. The fund continues to adhere to its objective of tracking the Bitwise 10 Large Cap Crypto Index.

4. Key Risks That Could Impact Your Investment

Investing in BITW offers diversified crypto exposure but comes with specific risks:

• Extreme Price Volatility: Cryptocurrencies are known for their rapid and unpredictable price movements. The value of your investment can fluctuate significantly and quickly.
• Evolving Market & Uncertainty: The crypto and blockchain ecosystem remains nascent and rapidly changing. The long-term viability and value of these assets remain uncertain.
• Regulatory Scrutiny: The crypto market operates with less regulation than traditional financial markets. New or stricter regulations from governments (like the U.S. Congress or SEC) could severely impact crypto values and the fund. There's also a risk the fund itself could face new, costly regulatory classifications (e.g., "money service business").
• Tracking Error & Premium/Discount to NAV: The ETF's market price on the exchange might not always perfectly match the underlying value of its crypto holdings (Net Asset Value or NAV). It could trade at a premium (above NAV) or a discount (below NAV).
• Operational Risks:
  • Custodian Risk: If Coinbase Custody Trust Company, LLC, were to fail or be unable to perform its duties, the fund's assets could be at risk.
  • Sponsor Risk: The fund relies on Bitwise Investment Advisers, LLC, to manage its operations. A change in management or their inability to perform could negatively affect the fund.
  • Conflicts of Interest: Potential conflicts between the fund's manager and the fund itself could arise.
• Technical Crypto Risks: Specific risks inherent to blockchain technology, such as "51% attacks" (where a single entity controls most of a network, potentially manipulating transactions) or "hard forks" (significant software changes that can split a cryptocurrency into two, creating complex management challenges for the fund).

5. Competitive Position

The Bitwise 10 Crypto Index ETF operates in a rapidly expanding market for crypto investment products. It differentiates itself by offering diversified exposure to the top 10 large-cap cryptocurrencies through a single, regulated ETF structure. Its primary competitors include:

• Other Crypto ETFs: Funds tracking specific cryptocurrencies (e.g., Bitcoin futures ETFs, or potential spot Bitcoin ETFs) or different crypto indexes.
• Direct Crypto Holdings: Investors buying and holding cryptocurrencies directly through exchanges.
• Other Crypto Investment Vehicles: Such as private funds, trusts, or companies with significant crypto holdings.

BITW's strength lies in its broad diversification within the large-cap crypto space and its established presence as a "well-known seasoned issuer."

6. Future Outlook and Market Trends

The outlook for the Bitwise 10 Crypto Index ETF is closely tied to the broader cryptocurrency market and the evolving regulatory environment.

• Continued Crypto Adoption: The fund anticipates continued institutional and retail adoption of digital assets, which could drive demand and potentially increase asset values.
• Regulatory Clarity: We expect increased regulatory clarity from global authorities to be a significant catalyst, potentially reducing market uncertainty and attracting more traditional investors. However, adverse regulatory actions remain a key concern.
• Technological Advancements: Ongoing innovation in blockchain technology and the development of new cryptocurrency use cases will likely shape the market.
• Macroeconomic Factors: Broader economic conditions, inflation, and interest rate policies will likely continue to influence investor sentiment towards risk assets, including cryptocurrencies.

The fund remains committed to providing diversified exposure to the large-cap crypto market, adapting to market trends while navigating regulatory developments.