DEFI Net Income Halves Amid Bitcoin Strategy Shift, NAV Rises

TL;DR

DEFI's pivot to spot Bitcoin is boosting NAV per share, but net income is down significantly, signaling a challenging transition period for the ETF.

AI Summary

Tidal Commodities Trust I (DEFI) reported a net income of $3,160,734 for the nine months ended September 30, 2025, a significant decrease from $6,228,827 in the same period of 2024. The trust's net assets increased to $15,532,961 as of September 30, 2025, up from $14,839,385 at December 31, 2024. This growth was primarily driven by a net change in unrealized appreciation on investments of $2,119,470 for the nine months ended September 30, 2025, compared to a depreciation of $765,531 in the prior year. The fund, Hashdex Bitcoin ETF, transitioned its investment strategy on March 27, 2024, to primarily hold spot bitcoin, with at least 95% of assets in physical bitcoin and up to 5% in CME-traded bitcoin futures, cash, and cash equivalents. Shares issued and outstanding decreased from 140,000 at December 31, 2024, to 120,000 at September 30, 2025, while net asset value per share rose from $106.00 to $129.44. The fund experienced net redemptions of shares totaling $2,467,158 for the nine months ended September 30, 2025, a stark contrast to net issuances of $626,743 in the prior year.

Why It Matters

This filing reveals a critical shift in DEFI's investment strategy from bitcoin futures to primarily spot bitcoin, effective March 27, 2024, which could significantly alter its risk profile and correlation to the underlying asset. For investors, the substantial decrease in net income from $6.23 million to $3.16 million year-over-year, despite an increase in net assets, suggests a less profitable period or higher operational costs post-transition. The competitive landscape for Bitcoin ETFs is intensifying, and DEFI's ability to attract and retain capital will depend on its performance relative to peers. Employees and customers of the fund will be impacted by the strategic direction and financial health, while the broader market watches how this shift affects liquidity and pricing in the nascent spot Bitcoin ETF space.

Risk Assessment

Risk Level: medium — The fund's primary investment in Bitcoin, representing 99.40% of net assets as of September 30, 2025, exposes it to the inherent volatility and regulatory uncertainties of the cryptocurrency market. While the shift to spot bitcoin reduces futures contract risk, the fund's net income decreased by 49.3% from $6,228,827 in 2024 to $3,160,734 in 2025, indicating potential operational or market challenges post-transition.

Analyst Insight

Investors should closely monitor DEFI's performance against other spot Bitcoin ETFs, particularly its ability to generate income and manage expenses in the new investment structure. Given the significant decrease in net income and net redemptions of $2,467,158, a cautious approach is warranted until the fund demonstrates consistent profitability and asset growth under its spot bitcoin strategy.

Financial Highlights

debt To Equity

0.00

revenue

$1,083,215

operating Margin

N/A

total Assets

$15,536,104

total Debt

$0

net Income

$3,160,734

eps

$26.34

gross Margin

N/A

cash Position

$60,692

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $15,532,961 — Net Assets (Increased from $14,839,385 at December 31, 2024)
• $3,160,734 — Net Income (9 months ended Sep 30, 2025) (Decreased from $6,228,827 in the prior year)
• $129.44 — Net Asset Value per Share (Increased from $106.00 at December 31, 2024)
• 120,000 — Shares Issued and Outstanding (Decreased from 140,000 at December 31, 2024)
• $2,119,470 — Net change in unrealized appreciation on investments (Positive change for the nine months ended September 30, 2025, compared to depreciation in 2024)
• $2,467,158 — Net Redemptions of Shares (For the nine months ended September 30, 2025, contrasting with net issuances in 2024)
• 99.40% — Percentage of Net Assets in Bitcoin (As of September 30, 2025, reflecting the new spot bitcoin strategy)
• 95% — Target allocation to spot bitcoin (Under normal market conditions, as per the new investment policy)

Key Players & Entities

• Tidal Commodities Trust I (company) — Registrant and issuer of DEFI shares
• Hashdex Bitcoin ETF (company) — The specific fund series of Tidal Commodities Trust I
• U.S. Securities and Exchange Commission (regulator) — Regulatory body that declared DEFI's Form S-1 effective
• Nasdaq Bitcoin Reference Price - Settlement (NQBTCS) (company) — The benchmark index tracked by the Hashdex Bitcoin ETF
• Chicago Mercantile Exchange Inc. (company) — Exchange where Bitcoin futures contracts are traded
• Teucrium Commodity Trust (company) — Predecessor Trust of the Hashdex Bitcoin Futures ETF
• Teucrium Trading, LLC (company) — Prior Sponsor of the Predecessor Fund
• Commodity Futures Trading Commission (regulator) — Regulatory body that treats bitcoin as a commodity
• National Futures Association (regulator) — Member organization for the Sponsor
• First American Government Obligations Fund - Class X (company) — Money market fund held as cash equivalents

FAQ

Risk Factors

• Cryptocurrency Volatility [high — market]: The trust's primary asset is Bitcoin, which is subject to extreme price volatility. The net change in unrealized appreciation on investments was $2,119,470 for the nine months ended September 30, 2025, but this can swing significantly, impacting net income and net asset value.
• Investment Strategy Shift Impact [medium — market]: The transition to primarily holding spot Bitcoin (at least 95%) on March 27, 2024, has altered the risk profile. While aiming for direct exposure, it still leaves up to 5% for futures, cash, and equivalents, introducing potential derivative risks.
• Redemptions and Liquidity [medium — operational]: The trust experienced net redemptions of $2,467,158 for the nine months ended September 30, 2025, a reversal from net issuances in the prior year. Significant redemptions could pressure liquidity if not managed effectively.
• Evolving Crypto Regulations [high — regulatory]: The regulatory landscape for cryptocurrencies is still developing. Changes in regulations could impact the trust's ability to hold, trade, or value its Bitcoin holdings, affecting operations and compliance.
• Dependence on Bitcoin Performance [high — financial]: The trust's financial performance is almost entirely dependent on the price movements of Bitcoin, as 99.40% of net assets were in Bitcoin as of September 30, 2025. This concentration poses a significant financial risk.

Industry Context

The digital asset investment landscape is rapidly evolving, with a growing institutional interest in spot-based cryptocurrency ETFs. Competitors are also adjusting strategies to align with regulatory clarity and investor demand for direct asset exposure. However, the inherent volatility of cryptocurrencies and the nascent regulatory environment continue to pose challenges.

Regulatory Implications

The trust operates within a dynamic regulatory framework for digital assets. Any shifts in SEC guidance or broader cryptocurrency regulations could impact the trust's investment strategy, operational compliance, and the valuation of its holdings.

What Investors Should Do

1. Monitor Bitcoin price volatility closely.
2. Analyze the impact of ongoing share redemptions.
3. Evaluate the success of the spot Bitcoin strategy.
4. Stay informed on cryptocurrency regulatory developments.

Key Dates

• 2024-03-27: Investment Strategy Transition — Shifted to primarily holding spot Bitcoin (>=95%), impacting asset allocation and risk profile.
• 2025-09-30: Quarterly Reporting — Showcased a decrease in net income but an increase in net assets and NAV per share, alongside significant net redemptions.

Glossary

Net Assets

The total value of an entity's assets minus its liabilities. For an investment fund, it represents the value available to shareholders. (Indicates the overall size and value of the trust, which grew to $15,532,961 as of Sep 30, 2025.)

Net Asset Value (NAV) per Share

The value of one share of a mutual fund or ETF. Calculated by dividing the total net assets by the number of outstanding shares. (Crucial for investors to understand the per-share value, which increased from $106.00 to $129.44.)

Unrealized Appreciation (Depreciation)

The increase or decrease in the value of an investment that has not yet been sold. It becomes a realized gain or loss only upon sale. (A key driver of the trust's net income, with a significant positive change of $2,119,470 for the nine months ended Sep 30, 2025.)

Spot Bitcoin

The actual cryptocurrency asset (Bitcoin) traded and delivered immediately, as opposed to futures contracts which are agreements to buy or sell at a future date. (The trust's primary investment, with at least 95% of assets held in spot Bitcoin under its new strategy.)

Net Redemptions

Occurs when more investors sell their shares back to the fund than buy new shares. This reduces the total number of outstanding shares and the fund's assets. (The trust experienced $2,467,158 in net redemptions for the nine months ended Sep 30, 2025, indicating investor outflow.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Tidal Commodities Trust I saw a significant decrease in net income, from $6,228,827 to $3,160,734. This was largely driven by a substantial swing in investment performance, from a net unrealized depreciation of $765,531 to an appreciation of $2,119,470. While net assets grew to $15,532,961, the trust experienced substantial net redemptions of $2,467,158, a reversal from net issuances in the prior year, and a decrease in outstanding shares from 140,000 to 120,000.

Filing Documents

• defi_10q-093025.htm (10-Q) — 596KB
• ex31-1.htm (EX-31.1) — 18KB
• ex31-2.htm (EX-31.2) — 17KB
• ex32-1.htm (EX-32.1) — 6KB
• ex32-2.htm (EX-32.2) — 6KB
• defi10q001.jpg (GRAPHIC) — 167KB
• 0001999371-25-017892.txt ( ) — 3562KB
• defi-20250930.xsd (EX-101.SCH) — 22KB
• defi-20250930_cal.xml (EX-101.CAL) — 32KB
• defi-20250930_def.xml (EX-101.DEF) — 95KB
• defi-20250930_lab.xml (EX-101.LAB) — 158KB
• defi-20250930_pre.xml (EX-101.PRE) — 141KB
• defi_10q-093025_htm.xml (XML) — 497KB

Notes to Financial Statements

Notes to Financial Statements F-13 TIDAL COMMODITIES TRUST I COMBINED September 30, 2025 (Unaudited) December 31, 2024 Assets Investments (1) $ 15,439,452 $ 14,713,026 Cash and cash equivalents (2) 60,692 29,680 Interest receivable 208 85 Equity in trading accounts: Due from broker 35,752 108,214 Total equity in trading accounts 35,752 108,214 Total assets $ 15,536,104 $ 14,851,005 Liabilities Management fee payable to Sponsor 3,143 11,620 Total liabilities $ 3,143 $ 11,620 Net assets $ 15,532,961 $ 14,839,385 Shares issued and outstanding 120,000 140,000 ( no par value, Unlimited amount authorized) Net asset value per share $ 129.44 $ 106.00 Market value per share $ 129.50 $ 106.21 (1) Cost basis $ 9,706,036 $ 11,099,080 (2) Cost basis $ 60,692 $ 29,680 (1) Cost basis $ 9,706,036 $ 11,099,080 (2) Cost basis $ 60,692 $ 29,680 The accompanying notes are an integral part of these financial statements. F-1 TIDAL COMMODITIES TRUST I COMBINED SCHEDULE OF INVESTMENTS September 30, 2025 (Unaudited) Description: Assets Yield Fair Value Percentage of Net Assets Shares Cryptocurrency Bitcoin $ 15,439,452 99.40 % 134.87 Total Cryptocurrency (cost $ 9,706,036 ) $ 15,439,452 99.40 % Cash equivalents Money market funds First American Government Obligations Fund - Class X 4.03 % $ 60,692 0.39 % 60,692 Total Cash Equivalents (cost $ 60,692 ) $ 60,692 0.39 % The accompanying notes are an integral part of these financial statements. F-2 TIDAL COMMODITIES TRUST I COMBINED SCHEDULE OF INVESTMENTS December 31, 2024 Description: Assets Yield Fair Value Percentage of Net Assets Shares Cryptocurrency Bitcoin $ 14,713,026 99.15 % 157.85 Total Cryptocurrency (cost $ 11,099,080 ) $ 14,713,026 99.15 % Cash equivalents Money market funds First American Government Obligations Fund - Class X 4.41 % $ 29,

View Full Filing

View this 10-Q filing on SEC EDGAR