Summary I rate Bitfarms as a hold, highlighting its upcoming share buyback and strategic US expansion as key growth drivers. Despite 32.8% YoY revenue growth, BITF's significant net losses and rising costs, especially from Argentina, weigh on near-term profitability. The Stronghold acquisition and US energy pipeline are expected to reduce costs and improve operational efficiency into 2026. BITF trades at a fair valuation with potential upside, but execution of the buyback and asset growth are crucial for future performance. I have watched the evolution of cryptocurrency, particularly Bitcoin mining, which has evolved from a small-scale venture to an energy-intensive operation conducted on an industrial scale. Over the last five years, Bitcoin ( BTC-USD ) has increased by 967.82%. Back in 2022, I wrote about MicroStrategy ( MSTR ) as a solid tracker of BTC, and it is up 703.95% (since then). Earlier on, I had focused on CleanSpark ( CLSK ) and its expanded mining activities, including sustainable mining, and the stock has since gained 19.09% (from 2021). In this article, I will explain why I am rating Bitfarms Ltd. ( BITF ) as a hold in light of the company’s buyback plan and its renewed focus on the US as a strategic location for growth. However, I will consider the growth in net losses ahead of Q2 2025 earnings that may hamper the stock’s rally into 2026, if it persists. Bitfarms’ Strategic Realignments Into 2026 Bitfarms, a Canadian operator of data centers and a Bitcoin miner, is set to purchase 10% of its public float (of 499 million shares) in a share buyback plan beginning on July 28, 2025, and continuing through July 27, 2026. This 1-year program will see BITF retire about 49,943,031 common shares. As of July 29, 2025, BITF had a market capitalization of $710.32 million and an outstanding share balance of 557,548,857. At the current price of $1.24 (per share), BITF is likely to spend $62 million in the buyback plan. This change is likely to increase the share price past $1.30, and an increase in the market cap, as it will be seen in this article. The acquisition of Stronghold by BITF in Q1 2025 also set the stage for the company’s expanded opportunities in the US (to about 80% of its North America energy portfolio, against 20% - international), which will prove pivotal in the future. It is all about the vertical integration and control of its power with the US exposure. In essence, a Bitcoin miner’s proximity to ample sustainable energy (in this AI race) is critical for revenue growth and cost optimization. Then again, the reduced rewards for blocks after BTC halving in 2024 also warrant BITF's growth into high-performance computing (HPC) and AI to create long-term value for shareholders. Q1 2025 saw BITF record a 32.8% (YoY) revenue growth to $66.8 million against a net loss of $35.9 million vs. a net loss of $6 million in Q1 2024. Costs of revenues in Q1 2025 rose to an all-time quarterly high of $67.4 million. This increase is partly attributed to the acquisition of Stronghold Digital and asset write-down in Argentina. Revenues in Argentina declined 40% (YoY) to $6.955 million in Q1 2025 from $11.576 million in Q1 2024. The company also explained in its Q1 2025 management analysis that the supply of electricity to its Argentine facility in Rio Cuarto had been halted, affecting the intended long-term contract of up to 210 MW. In regard to operational efficiency, about half of the company's revenue ($37.3 million) was proceeds from the sale of 428 BTC (from the total 693 BTC earned in the quarter) at an average price of $87,000. Seeking Alpha Currently, BTC is selling at $118,140, indicating an increase of about 36% (from the last sale by BITF), slightly shy of its all-time high of +$120,000. Despite the high net losses, BITF has developed its culture of paying for its expenses using operating revenues that have been growing into 2026. Looking forward, BITF now has the energy infrastructure to reach the intended upside exposure coupled with rising BTC prices. By Q2 2025, BITF has about 1,166 BTC recorded in its balance sheet, and it has an opportunity to invest a significant amount of capital into its HPC and AI. Further, about 37.7% of its cost of revenues, or about $25.408 million, was attributed to energy expenses, which will be significantly reduced with the acquisition of Stronghold and the US expansion that is set to give a growth energy pipeline of nearly 1.1 GW in the US state of Pennsylvania (in the long run). As of May 2025, the total contracted energy capacity in BITF’s 15 BTC data centers (spread between North and South America) stood at 908 MW. Thus, the operationalization of the Stronghold energy pipeline will help to lower BITF’s costs into 2026 and improve the company’s profitability. Valuation I will use the net asset value per share metric to evaluate BITF since the company has a steady asset cover against liabilities. BITF has high net losses that undermine profitability, thereby making the price-to-earnings ratio ineffective. BITF’s net losses have increased 500% (YoY) in Q1 2025, while the adjusted EBITDA dropped 35% (YoY) to $15.1 million, down from $23.32 million in Q1 2024. I believe net asset value per share will provide a stable valuation, and I will then use this metric to determine the future price of the company. As of Q1 2025, BITF’s asset balance stood at $777.003 million against liabilities valued at $112.294 million. Total equity into Q2 2025 is $664.709. It is noteworthy that BITF is expected to reduce its outstanding share balance by 10%, meaning that the outstanding share balance in 2026 (from the buyback plan discussed earlier) will be 507,605,826 shares. We will get the future price of $1.31 by dividing the total equity of $664.709 million by the expected outstanding share balance. This calculation shows that BITF's future price will be trading at a fair valuation of +5.65% (YoY). We have to keep in mind that the growth in BITF’s US activities will increase the asset balance by 2026, thereby leading to a subsequent increase in the total equity. Asset Liabilities Net asset value (total equity) Outstanding share balance Future share price Current share price Valuation difference BITF $777.003 million $112.294 million $$664.709 million 507.606 million $1.31 $1.24 +5.65% (trading at fair valuation) Rezolve AI PLC ( RZLV ) $19.8 million $57.8 million -$38 million 243.7 million shares $0.16 $2.75 -94.2% (greatly overvalued) Cognyte Software Ltd. ( CGNT ) $491.5 million $275.7 million $215.8 million 72.9 million $2.96 $9.12 -67.54% (greatly overvalued) CLSK $2.657 billion $766.5 million $1.891 billion 280.9 million shares $6.73 $11.73 -42.63% (overvalued) MSTR $43.92 billion $10.394 billion $33.526 billion 273.4 million $122.63 $394.66 -68.93% (overvalued) As seen in this net asset valuation analysis, only BITF is trading at a fair valuation with a potential upside into 2026. RZLV has a negative equity balance, meaning that it is insolvent (as far as its liabilities are concerned). MSTR and CLSK have a strong balance sheet as far as their asset values to liabilities are concerned. However, these companies have recorded significant dilution or an increase in the number of outstanding shares, that have led to lower forecasts. For instance, MSTR realized a 54.11% (YoY) growth in its outstanding share balance from 177.4 million shares as of March 2024 to 273.4 million by March 2025. CLSK realized a 23.26% (YoY) growth in its outstanding share balance in 2025, which has negatively impacted this forecast into 2026 despite the company's robust asset balance. Risk I have factored in the buyback plan announced by BITF in my valuation. Failure to actualize this share repurchase program will adversely affect BITF’s share performance, as elucidated in this article. I also expect the company to grow its asset cover into 2026 as it advances its US activities by stabilizing its energy infrastructure. Bottom-Line I have rated Bitfarms Holdings as a hold in this analysis with a focus on its buyback plan and continued expansion into the US. However, the company realized significant net losses into Q2 2025 that have dampened profitability. Still, my analysis shows the company is trading at a fair valuation with a potential upside into 2026. I will be looking forward to the release of its Q2 2025 earnings in August 2025 for the update.

2025-07-31 13:25

Asia shares mostly in red on Thursday, China's market led declines after the release of weak factory activity data, signaling economic headwinds. Conversely, Japanese stocks gained ground following the Bank of Japan's expected decision to hold interest rates steady. Market participants, however, maintained a watchful stance due to the looming August 1st U.S. tariff deadline. Caution was also building ahead of key US economic data, such as jobs figures and PCE inflation. U.S. President Donald Trump announced Wednesday that the U.S. will impose a 15% tariff on imports from South Korea as part of a new trade deal that avoids steeper levies. Gold rose above $3,290 per ounce on Thursday, rebounding from a more than 1% drop to a four-week low in the previous session. Japan ( NKY:IND ) rose 1.06% to above 40,800 while the broader Topix Index gained 0.3% to 2,930 on Thursday. The Japanese yen rose past 149 per dollar on Thursday, recovering from the previous session’s losses after the Bank of Japan left interest rates unchanged in a unanimous decision, as widely expected. The Bank of Japan (BOJ) unanimously decided to keep its benchmark short-term interest rate at 0.5% in its July meeting. This move, widely anticipated by the market, maintains borrowing costs at their highest level since 2008 and reflects the central bank's cautious stance on normalizing policy. Retail sales in Japan climbed by 2.0% year-on-year in June 2025, accelerating slightly from a downwardly revised 1.9% rise in the previous month and exceeding market expectations of 1.8% growth. Japan’s industrial production rose 1.7% month-over-month in June 2025, sharply beating market expectations of a 0.6% decline and bouncing back from a 0.1% fall in the previous month, flash data showed. Separate data showed, Japan’s housing starts fell 15.6% year-on-year in June 2025, slightly better than market expectations of a 15.8% drop and easing from May’s sharp 34.4% plunge—the steepest since September 2009. Japan’s consumer confidence index declined to 33.7 in July 2025, down from June’s four-month high of 34.5, and below market forecasts of 35.1. China ( SHCOMP ) fell 0.90% to below 3,600 while the Shenzhen Component lost 0.5% to 11,145 on Thursday, and the offshore yuan rose to around 7.19 per dollar on Thursday, snapping a five-session losing streak, even as investors weighed disappointing PMI data against cautious optimism from the latest Politburo meeting. Official data pointed to a loss of economic momentum in July, with the composite PMI dropping to a three-month low of 50.2 from June’s 50.7. Manufacturing activity remained in contraction, falling to 49.3 from 49.7, while the services PMI declined to 50.1 — its weakest reading in eight months — from 50.5. Hong Kong ( HSI ) fell 1.39% to 24,955 in early trade on Thursday, slipping for the third session following China’s weak PMI figures in July. The Hong Kong Monetary Authority kept its base rate unchanged at 4.75% on July 31, aligning with the U.S. Fed’s move to maintain its target range at 5.25%–5.5%. India ( SENSEX ) fell 0.71% to 80,954, halting gains from the previous two sessions, while the Nifty also fell 0.6% to around 24,700 after US President Donald Trump announced a 25% tariff on Indian imports. The Indian rupee held around 87.7 per dollar on Thursday, sliding toward an all-time low hit in February. However, Trump acknowledged that the US is still negotiating with India, while New Delhi appeared unfazed, holding firm on its trade stance. Australia ( AS51 ) fell 0.19% slipped 0.4% to below 8,720 on Thursday, ending its three-day winning streak, dragged down by miners and gold stocks. The Australian dollar strengthened to above $0.645 on Thursday, attempting to rebound from an over 1% loss in the prior session to end a five-session losing streak. Australia's export prices fell by 4.5% quarter-on-quarter in Q2 2025, reversing a 2.1% rise in Q1 and marking the first decline in three quarters. Australia’s import prices fell by 0.8% quarter-on-quarter in Q2 2025, exceeding market expectations of a 0.5% decline and reversing from a 3.3% surge in Q1. Australian retail sales rose 1.2% year-on-year in June, surpassing forecasts of a 0.4% increase and marking the largest monthly gain since March 2022. While the data showed signs of a revival in household spending and supported the Reserve Bank of Australia’s cautious approach to monetary policy, it did not have much impact on expectations for a rate cut next month. In the U.S., on Wednesday, all three major indexes ended mostly lower after the Federal Reserve left interest rates unchanged at its July meeting, while investors digested a wave of earnings reports U.S. stock futures rose sharply on Thursday, lifted by strong earnings results from tech heavyweights Meta Platforms and Microsoft: Dow +0.30% ; S&P 500 +0.95% ; Nasdaq +1.36% . Currencies: ( JPY:USD ), ( CNY:USD ), ( AUD:USD ), ( INR:USD ), ( HKD:USD ), ( NZD:USD ). More on Asia: Bank of Japan holds rates steady at 0.5%, as expected Australia CPI slowest in four years in Q2, headline CPI at 0.7% Q/Q and 2.1% Y/Y Trump says U.S. strikes ‘massive’ trade deal with Japan, imposes 15% tariffs Japan vows more rice imports from U.S. as part of trade deal Japan's core inflation eases to 3.3% in June, slowest pace since March

2025-07-31 09:11

Summary Circle is a pure-play on stablecoin infrastructure, benefiting from regulatory clarity and institutional trust, but currently trades at a high valuation. USDC’s compliance, transparency, and integration with traditional finance position Circle as the leading U.S.-regulated stablecoin issuer, especially post-GENIUS Act. Key risks include heavy reliance on interest income, macroeconomic sensitivity, and revenue-sharing with Coinbase, which limits profitability and diversification. My recommendation is Hold at current levels, Buy on dips for long-term investors, as Circle offers significant upside for those patient with short-term volatility. Introduction From its IPO price of $31 on June 5, 2025, Circle Internet Group (CRCL) surged over 600%, hitting intraday highs of nearly $300 just weeks after being listed. Even after a pullback, the stock still trades around ~$195, showing that high expectations are still present due to Circle’s central role in the future of digital finance. However, with such a fast increase, many investors are asking: Is this valuation justified? Or is CRCL caught up in the momentum of crypto’s current bull cycle? CRCL is the sole issuer of USDC, a fully backed, U.S. dollar-pegged stablecoin used for trading, payments, decentralized finance (DeFi), and tokenized assets. A stablecoin is a type of cryptocurrency designed to maintain a fixed value. Since it’s pegged to the U.S. dollar, it has a 1:1 exchange rate with the dollar and is backed by reserves to keep its price stable. Currently, USDC is integrated across almost every major blockchain and crypto exchange and has earned itself a strong reputation for its safety and compliance. Other than issuing USDC, Circle also earns revenue from interest income on its reserve assets (mostly short-term Treasuries), infrastructure APIs for payment and smart contracts, and institutional partnerships. Their mission is to “raise global economic prosperity through the frictionless exchange of value.” Their Co-founder, Chief Executive Officer & Chairman, Jeremy Allaire, says “If you could take what we think of as money, make it digital and available on the internet, then that would dramatically change the way we use money and open up opportunity around the world. That’s the idea behind Circle.” In 2024, Circle generated $1.68 billion in revenue, mainly from interest income on USDC reserves. However, its net income fell to just ~$155.7 million, a near 42% drop from the previous year of $268 million, indicating margin pressure and reinvestment into growth. The company currently trades at over 22x sales and a forward P/E of ~100, highlighting the high-growth expectations already priced into the stock. For 2025, analysts forecast revenue growth of over 50%, with projections nearing $2.6 billion in revenue for Circle, as stablecoin adoption rises and real-world integrations begin to contribute even more to growth. Based on the balance sheet, Circle looks good with no long-term debt, and they’ve got a healthy amount of cash due to the way they manage the reserves backing USDC. They’re still generating free cash flow, even though it may be affected by short-term interest rates. TradingView Today, CRCL is currently trading at $193, a ~20% drop from the most recent high just over a week prior. There’s a support level at ~$175 and a resistance level at ~$240, giving the bounds for the current range. It’s currently consolidating in that range, and if there’s a breakout from $240, we can expect to see a push to around $300. However, currently CRCL’s volume has fallen off and the stock looks to be range-bound for the near future, suggesting that price action is currently cooling off after the recent period of high volatility. Relative Strength Indicator ((RSI)) for CRCL is currently at 54.31, indicating neutral to slightly bullish price movement. While the recent momentum definitely has helped Circle, it’s not the only thing that will influence and contribute to its success. The recent passage of the GENIUS Act, a regulatory framework for stablecoins represents a major tailwind for USDC. As the global crypto economy grows and more institutions look for regulated and transparent stablecoin infrastructure, Circle will be at the front, positioned well to become the glue of on-chain finance. Unlike speculative tokens such as Bitcoin (BTC-USD), or Ethereum (ETH-USD), Circle’s real-world revenue, regulatory moat, and integration with traditional finance make CRCL a strong long-term infrastructure play. In this article, I’ll break down Circle’s business model, stablecoin economics, regulatory tailwinds, and valuation concerns while arguing that CRCL may become the most important infrastructure stock within the crypto economy. Circle’s Business Model Circle Internet Group’s core business revolves around their stablecoin, USDC. USDC is the second-largest stablecoin by market cap and an important part of the crypto ecosystem. The majority of their revenue (over 95%) comes from interest earned on the reserves backing USDC. These reserves are primarily invested in high-quality, short-duration assets such as U.S. Treasury bills and cash equivalents. In other words, Circle acts sort of like a bank. As users mint or redeem USDC, Circle manages the underlying funds and collects the interest on those reserves. This interest income is the backbone of Circle’s business model, and in 2025, analysts project them to generate $2.2 to 2.6 billion in revenue, a ~30-40% increase from 2024. Evidently, this business model comes with significant exposure to interest rate fluctuations. For instance, a 100 basis point drop (1%) in short-term interest rates could remove around $700 million from Circle’s projected revenue in 2025. That’s nearly a quarter being taken off just due to rate cuts. Given central banks’ recent signals pointing towards possible rate cuts later this year in 2025, investors need to be mindful of how such changes could affect Circle’s core model. A major element of Circle’s business model is its partnership with Coinbase (COIN), which is one of the largest and most prominent cryptocurrency companies in the world. They serve as the primary USDC distributor, and with that, they also take a portion of Circle’s interest revenue - up to 60% depending on USDC volume on Coinbase’s platform. Essentially in 2024, out of their $1.68 billion revenue, over $900 million was paid out to Coinbase. While this partnership is incredibly important to expanding USDC’s reach and usage, it also limits Circle’s gross profit margin and limits the company’s ability to reinvest into growth or diversify its revenue streams. However, realizing these issues, Circle is actively exploring ways to broaden its revenue streams. It’s begun rolling out Treasury services for businesses, which enable them to hold and transact with USDC more efficiently. On top of that, Circle also offers programmable payments and APIs to facilitate blockchain integrations for customers. Despite being in early stages, these initiatives could provide fee-based and service revenue streams that lessen its reliance on interest income over time. From a competitive standpoint, USDC holds an edge thanks to Circle’s transparency and regulatory compliance. In an ecosystem where many regulators are deeply examining stablecoins and their possible risks, Circle’s commitment to transparency offers it a significant moat. This has helped USDC gradually get more users, especially compared to competitors like Tether (USDT-USD), which has faced criticism and regulatory headwinds due to a lack of transparency about its reserves. Overall, Circle’s business model is tightly tied to interest income from USDC reserves and heavily influenced by macroeconomic conditions and its revenue-sharing deal with Coinbase. That said, this setup could backfire if rates drop. USDC’s Position in the Stablecoin Market Stablecoins have become the backbone of the crypto economy, being used in trillions of dollars' worth of on-chain transactions annually, from trading and lending to remittances and on-off ramps. Within such a rapidly growing space, USDC stands out not just as the second largest stablecoin by market capitalization, but as the one most trusted by institutions and regulators alike. Q. Chen, with data from Messari USDC currently has a circulating supply of roughly $64 billion. According to CRCL’s S-1 filing, Circle has minted $558 billion of USDC and redeemed more than $502 billion from January 1, 2021, to March 31, 2025. This means that from March 2025 to today, ~$8 billion of USDC has entered the circulating supply. Compared to USDT, which has a circulating supply of ~$163 billion, USDC has a market share of around 26% among the top fiat-backed stablecoins. While that may appear small compared to USDT, USDC’s use cases are primarily within situations that require transparency, compliance, and reliability, which you won’t find with Tether. It’s used in DeFi protocols, U.S.-based exchanges, and fintech partnerships. For instance, USDC is the top stablecoin used on major Ethereum DeFi platforms like Aave and Compound, and it's become the preferred choice for compliant dollar transfers in Circle’s treasury services for businesses. USDT, on the other hand, continues to be dominant in offshore markets and high-frequency trading, despite its unclear reserve practices and poor regulatory track record. As regulators begin becoming more strict when it comes to stablecoins, Tether’s lack of information may leave it vulnerable to losing market share. Circle has done the opposite when it comes to this matter; they maintain monthly attestations, public reserve audits, and full backing by short-term U.S. treasuries and cash equivalents, giving users safety that’s usually hard to find in crypto. Bitwise Asset Management with data from Coin Metrics. Data From Q1 2020 to Q2 2025 According to a recent report from Bitwise Asset Management, they state that “stablecoins are going parabolic,” with both market capitalization and transaction volumes reaching all-time highs. As you can see in the chart, USDC has more stablecoin transactions than any other stablecoin, despite not having the most market capitalization. This means, from a usage standpoint, they are in the lead. Another thing that Circle is doing is that it’s laying the groundwork for future real-world integration. They are building tools such as programmable wallets that allow businesses and developers to use USDC in practical ways. In addition to that, they hold partnerships with known companies like Visa (V), Shopify (SHOP), and MoneyGram, which all showcase their commitment to expanding the usage of their token. Circle has also recently launched USDC on more chains like Solana and Base, expanding the token’s presence in the crypto world. Solana enables ultra-fast, low-cost transactions ideal for consumer-based apps, while Base, developed by Coinbase, is focused on onboarding the next wave of users into the Ethereum ecosystem. USDC isn’t trying to beat USDT in total market share, they are just better in places where trust, compliance, and transparent usage are the most important. As more regulatory frameworks begin developing globally, Circle is in the perfect position to get a large share of stablecoin growth, even if it’s not the biggest by market capitalization. In a recent research note, JPMorgan strategists wrote that stablecoins will likely be “integrated with the traditional financial system, as well as more tokenization of real-world assets.” This aligns very closely with exactly what Circle is attempting to achieve. The GENIUS Act: A Regulatory Tailwind for Circle There are few developments that have the potential to affect the stablecoin industry the way the GENIUS Act will. Signed into law in July 2025 with bipartisan support and backing from the Trump administration, this bill is the first time that the U.S. has laid out a clear federal framework for payment stablecoins. The GENIUS Act requires that issuers of payment stablecoins hold 100% reserves in cash or short-term Treasury securities, undergo routine audits, enable daily redemptions at par, and register with federal or state regulators. The law also blocks algorithmic and rehypothecated stablecoins from being marketed as “payment stablecoins,” basically stopping a bunch of riskier players from gaining any regulatory advantage. This bill essentially put into law what Circle was already doing all along. USDC has been backed 1:1 with cash and Treasuries already, with documentation and disclosures that go beyond what this new law enforces. This makes Circle one of the few companies that are immediately compliant, while others, such as Tether, may struggle to conform to these new policies or risk having no market share in the U.S. Circle is one of the few firms that already had the systems in place to take advantage of the GENIUS Act from day one. They have a New York BitLicense, are a registered money transmitter in multiple states, and have partnerships with financial firms like BlackRock, Fidelity ( FIS ), BNY Mellon, Worldpay, and Nuvei. Circle’s early compliance was a bet on the direction of crypto’s regulatory future, and now that bet is paying off. This act may also change the way financial institutions approach stablecoins. Banks, brokerages, fintech apps, and payment processors that previously were unwilling to interact with crypto have now been given a legal green light to proceed. In that, Circle is the clear default and first choice for those who want to integrate stablecoin rails into their systems. Essentially, this law now pulls even more customers to Circle and their coin, USDC. However, that doesn’t mean the GENIUS Act is all upside. More regulation, capital requirements, and compliance costs may raise the barrier to entry and negatively affect margins over time for many players. Luckily, Circle is way better positioned than others to turn those headwinds into competitive advantages. If regulation becomes the price to entry, Circle is already at the front. The reason this is so important is because, for investors, this act gives Circle an asymmetric effect on their growth. Many of Circle’s competitors may restructure, de-risk, or exit the U.S. market altogether, but Circle has an open path to expand, get institutional clients, and further their influence in the digital finance space. Specifically for Circle, we can see the GENIUS Act as the boost that will further propel it into the future. Circle’s Valuation Circle’s valuation has drawn mixed reactions, with many critics quick to argue that the company is priced way beyond its fundamentals. At a current valuation of ~$45 billion, Circle trades at a premium compared to traditional fintech and even many large-cap crypto firms. The company currently is trading at a ttm price-to-earnings (P/E) ratio of ~600 and a forward price-to-earnings ratio (next fiscal year) of ~100. This multiple is incredibly high for a business whose profitability is heavily influenced by short-term interest rates, especially as central banks plan to lower rates into the second half of 2025. Q. Chen, with data from Finviz.com As you can see from the chart, you can get an idea of how outlandish CRCL’s valuations really are currently compared to public crypto/fintech peers. Included are PayPal (PYPL), COIN, Robinhood (HOOD), and SoFi Technologies (SOFI). But P/E doesn’t give the entire picture because Circle is in high-growth mode and not consistently profitable. Due to that, I also included ttm price-to-sales (P/S) to give a more accurate representation because it’s comparing the stock price to the company’s revenue. From this standpoint, CRCL’s valuation doesn’t look so insane. With a P/S of 22.71, it's right on par with that of HOOD, whose P/S is slightly higher at 28.23. P/S is the most appropriate out of all valuation metrics in this situation because Circle’s net income is highly volatile and not yet normalized, due to its current dependence on macro cycles and early stages. Circle isn’t just a standard business. Investors expecting normal multiples are looking at the wrong things. Circle is a pioneer. They are one of the only public pure plays on stablecoin infrastructure. They are also one of the few ways investors can get exposure to the backend of the crypto economy without taking direct risk on speculative tokens or exchange platforms. Unlike Coinbase, which is exposed to retail trading volume and crypto price volatility, Circle’s model is more tied to transaction rails and ecosystem usage. As more people enter the space, along with regulatory green lights, Circle’s valuations will begin to make more sense. Circle is definitely sensitive to macro factors. A drop in short-term yields could take hundreds of millions off its revenues. However, investors need to differentiate between short-term barriers and long-term growth. In the same way that early cloud computing stocks looked expensive on traditional metrics while building long-term success, Circle is also sacrificing short-term volatility in exchange for strong upside tied to the growth of global crypto finance. Another way to look at it is that Circle is building a Visa + SWIFT + PayPal all in one, within crypto. As a payment network enabling fast transactions, as infrastructure for cross-border money movement, and as a digital payment and wallet platform. When looking for companies to compare Circle to, there really aren’t many. And that’s the point. While Tether has a larger market cap, it’s offshore and lacks transparency. Coinbase may be the closest, but their revenues are more volatile and tied to retail trading volatility. PayPal and Stripe are dominant in fintech infrastructure, and Circle is doing that, but for an entirely new ecosystem that has recently gained more attention in the public eye. Critics will, however, continue to point to the P/E and P/S multiples and claim that it’s too high for a company with limited diversification and dependence on interest rates. That argument is not wrong, it’s just incomplete. Valuation is always a bet on the future, and Circle’s bet is that stablecoins will become the foundation of a global digitalized financial system. When looking at it from that perspective, today’s valuation may not just be understandable, but looking back, it may be even lower. Risks and Bearish Arguments Without a doubt, no serious investor should ignore the risks tied to Circle. This is a business still in its early stage, navigating a newer asset class and a new regulatory environment. But too often, critics argue that temporary volatility implies overall weakness. That misses the bigger picture. One big concern is Circle’s reliance on interest income. Over 90% of 2023 revenue came from the yield earned on reserves backing USDC. A 100 basis point rate cut would decrease earnings without a question. But in this situation, it’s just a case of market cycles, and most companies are vulnerable to these macro factors. Rates will go up and rates will come down. Circle is already making moves into other long-term revenue generators that’ll better their margins. Their goal is to simply build stable, dollar-denominated infrastructure for the coming digital currency age. There’s also another popular argument that revolves around Coinbase. Specifically, Circle’s revenue-sharing agreement that sends up to 60% of their income to Coinbase for holding USDC on its platform. Yes, this decreases gross margin. But this is what a partnership looks like. Circle is the issuer, and Coinbase is the distributor. USDC was created with a purpose in mind, and Coinbase was the vehicle that helped and allowed USDC to scale. As Circle continues to expand and grow through new channels like Robinhood and Stripe, we can expect the dependency to decrease. Another concern is its inferiority to Tether in terms of market share. What caused this massive difference between the two stablecoin giants? Circle’s decision to offboard USDC from several blockchains. This includes Tron, Algorand, and Stellar, and many more. However, their goal was aimed at reducing compliance risk and focusing on more trusted ecosystems like Ethereum, Solana, and Base. While this did help its regulatory profile, it hurt USDC’s multi-chain liquidity and reduced its presence in rapidly growing and low-fee networks. Meanwhile, USDT remained multi-chain, particularly on Tron, which is widely used for low-cost transfers in emerging markets. This helped USDT dominate more in regions like Asia and Latin America, where regulations are much more relaxed and people value speed and accessibility. Despite this, we must remember that Circle’s goal is to continue to operate under compliance standards and gain the trust of regulators, banks, and large institutions who want to pivot into stablecoins, not chase short-term adoption in loosely regulated markets at the expense of long-term strength. Conclusion Circle gives investors a unique opportunity—a pure play on the growth of blockchain infrastructure, stablecoin adoption, and the future of tokenized finance. This company gives you a chance to invest in the next digital era without all the speculation you get with meme coins or crypto mining. However, it doesn’t come without risks. The current business model is heavily reliant on one revenue stream, which leaves them exposed to interest rate fluctuations. In addition, revenue sharing also limits their profitability. And their market share, though hefty, still trails Tether by a large amount. I agree that these are present issues, but I argue that they only matter in the short to medium term. In addition, the GENIUS Act’s recent passage marks an important moment. It gives the kind of regulatory clearance that Circle has been pushing for and positions USDC as the stablecoin that the U.S. is ready to support. We’re entering an era in history where digital dollars and tokenized assets are becoming important to both institutional and retail users. As capital continues to flow into crypto ecosystems, whether it’s DeFi, gaming, payments, or real-world assets, the infrastructure providers with the most clarity and backing will benefit the most. Valuation is undeniably high. But so was PayPal in its early days, and so was Visa. For those who believed in the early stages, they were rewarded generously despite not waiting for perfect multiples, which is something that’s already very hard to find in today’s market. Their success came from identifying infrastructure that would influence the world in a big way before everyone else did. That’s the core of my thesis. Circle is an early, imperfect, and short-term volatile play. However, I believe it’s moving in the right direction despite all the critics. Given that information, my current recommendation is a Hold at current levels, with a Buy on dips strategy for long-term investors. Volatility should be expected, both from the stock itself and from crypto. However, Circle offers great upside for those willing to sit through the short-term headwinds. If capital continues to flow into digital assets, there’s no better company than Circle to ride that wave as a leader in crypto infrastructure. Until then, patience and diligence will be vital for those willing to make the bet. We would like to thank QX Chen for this piece.

2025-07-31 08:13

More on Bitcoin USD, Ethereum USD VanEck Mid-July 2025 Bitcoin ChainCheck Profit Taking Continues To Weigh On Cryptocurrencies Ethereum's Success Won't Translate Into Altcoins BlackRock's ETH ETF sees $223M inflows, pushing holdings past 3M ETH eToro plans to launch tokenized stocks on Ethereum blockchain

2025-07-30 23:15

Summary Marathon Digital (MARA) posted a massive EPS beat in Q2, driven by fair value gains on its expanding Bitcoin holdings. Despite muted market reaction, MARA’s vertically integrated, global business model strengthens its cost efficiency and operational resilience. The company’s BTC stash, acquired at a cost basis well below current prices, positions it for substantial upside if Bitcoin rallies further. Q3 is already shaping up well, with Bitcoin hitting all-time highs, likely setting up MARA for another mark-to-market accounting tailwind. MARA Holdings (NASDAQ: MARA ) Q2 is an example of when strong execution and long-term strategic positioning begins to translate into meaningful financials. Bitcoin's ( BTC-USD ) price was also an important tailwind for the quarter’s performance, driving the headline $808.2 million net profit. Q2 results beat the Street’s consensus on both the top and bottom lines. Revenue grew by 64% YoY to $238.5 million, and the bottom line flipped positive from a net loss per share of $0.72 a year ago to $1.84 earnings per share in Q2. While Bitcoin prices were a tailwind for the stellar financial performance, MARA’s operational execution and scaled efficiencies from owned infrastructure played an equally important role. MARA Holdings There were impressive increases in financial numbers and operational metrics across the board for MARA in Q2, which all contributed to the stellar top line and bottom line beats. Adjusted EBITDA saw an impressive 1,093% increase YoY to $1.2 billion - thanks to fair value accounting. The surge was primarily driven by the unrealized gain on MARA’s Bitcoin holdings (about $1.2 billion), as Bitcoin appreciated to $107k by the end of Q2. Strong operational execution and MARA’s "Bitcoin to Work" strategy, which entails utilizing a portion of the Bitcoin holdings through lending, also contributed to the improved profitability. Bitcoin to work strategy (MARA Holdings) MARA operations has scaled significantly and now thrives comfortably post halving, as Bitcoin blocks won in Q2 were up 52% YoY, from 457 blocks a year ago to 694 blocks in Q2. More blocks equals more Bitcoin mined. Beyond the tailwind from Bitcoin price surge, this is one of the operational improvements that contributed to the improved top line in Q2. Historically, MARA has consistently demonstrated efforts to be a cost-effective Bitcoin miner. MARA also maintained continuous improvement in operational efficiency, with fleet efficiency improving by 26% YoY to 18.3 Joules per Terahash (J/Th), and cost per petahash per day declined by 24% YoY in Q2. Fleet and hashrate improvement (MARA Holdings) MARA’s liquidity and BTC Holdings also improved. BTC Holdings increased 170% YoY to 49,951 BTC as of Q2 end, rising from 18,488 at the end of Q2 last year. MARA has embarked on an aggressive accumulation of BTC either through issuing debt to fund purchases or stacking its mined BTC on its balance sheet. Though the company management doesn't want to be seen as a pure BTC treasury company, the company's BTC holding, currently over 50,000 BTC, is so substantial that it can't be ignored when valuing MARA. Now while some people may see us as a bitcoin treasury company, given the size of our bitcoin holdings we don't consider ourselves as one. We're invaders, builders and operators. We're actively managing our bitcoin holdings to create long-term value for shareholders. - excerpt from the Q2 earnings call Liquidity (comprising cash and BTC holdings of cash & cash equivalents of $109.5 million, digital assets of $3.69 billion, and digital assets - receivable, net of $1.65 billion) was total of ~$5.4 billion at the end of Q2, which has even been further boosted by the additional $950 million raised recently. That is enough dry powder for future expansion, strategic investments, and navigating market volatility. balance sheet (MARA Holdings) With all the impressive financial and operational metrics highlighted so far, it is worth mentioning that MARA’s expansion has come at a cost for shareholders. Diluted share outstanding now stands at 491.3 million (if we include convertible notes, warrants, and unvested RSU/PSU). Diluted share outstanding was about 278.67 million a year ago. Which implies a heavy ~75% dilution YoY. MARA’s Vertical Integration Goes Global Every miner still in business finds ways to expand infrastructure. It is the norm of the business. They procure energy and hashrate to increase capacity and throughout. That's the only way to keep up with increasing Bitcoin network difficulty and stay competitive for winning block rewards. But MARA is currently doing this with a twist of strategic depth through vertical and geographical integration. It's also not a new trend for Bitcoin miners to strategically deploy facilities across geographical locations in a bid to secure cheaper energy and to spread risk. However, MARA’s current geographical expansion entails a strategy that is geared towards embedding itself deeper into local energy and compute ecosystems, beyond just running facilities in these locations. MARA’s ability to scale operations on a vertically integrated level has been one of the operational attractions for me over the years. In the past, that included proprietary immersion cooling solutions and custom-built electricity optimization software that were designed and deployed in-house. While the Q2 results contain a handful of bright spots, the vertical and geographic integration of MARA are the biggest standouts for me, because they show a shift from being just a mining firm to a global-scale infrastructure operator with deep control over energy and compute. If execution goes well, this comes with largely untapped business opportunities. Insights from the Q2 earnings call show that MARA's vertical integration strategy is now moving beyond Bitcoin mining and into HPC and AI compute infrastructure, and executing on a level that spans geographical diversification and full-stack infrastructure control. In Q2, that expansion meant investing further down the stack (and across borders) in the infrastructure and energy systems that will support the long-term pivot toward HPC and AI inference workloads. And that progress in Q2 included scaling flexible-load data centers, building grid-responsive energy platforms, and establishing a global footprint to secure access to subsidized or underutilized energy. Beyond performance, we continued to invest in the infrastructure that underpins our business from scaling low-cost flexible load data centers to exploring international opportunities in regions with abundant energy and growing demand for sovereign compute. This quarter, in support of our strategy to support the load balancing needs of AI HPC data centers, we announced strategic partnerships with TAE Power solutions backed by Google and Pado AI backed by LG. Frederick Thiel, CEO, MARA Holdings, during the Q2 earnings call Importantly, MARA is not approaching this vertical integration in HPC blindly. Partnerships with ventures like TAE Power Solutions (backed by Google) with whom MARA is building real-time responsive load management system to meet energy demands from the AI and HPC data center sector, and PADO AI (backed by LG) with whom they are building AI-native tools for intelligent data center load balancing, show a clear intention to codevelop grid-aware load balancing platforms that go beyond selling compute capacity, but integrate compute directly into the grid itself. This tight coupling between compute infrastructure and energy strategy is likely to become MARA’s signature competitive edge over other miners in HPC and AI compute. we've been laying the ground work for a regional headquarters in Saudi Arabia, and we have established entity in France as a European headquarters. We believe this approach will provide us access to low-cost energy by partnering with energy companies and infrastructure capital providers to lower our capital commitments. Through these efforts, we built a global growth pipeline exceeding 3 gigawatts, positioning us to scale efficiently across key markets. When you put it all together, as inference increasingly becomes the dominant cost center in AI, control over geography, latency and energy cost becomes a strategic advantage. We'll continue to invest here to ensure MARA is well positioned to meet this demand. We're excited to host our first ever Investor Day this fall. - Frederick Thiel, CEO, MARA Holdings, during the Q2 earnings call And in MARA’s geographical integration strategy, MARA is setting up regional HQs and forming energy company partnerships to secure low-cost power globally, while minimizing upfront capital through partner co-investment. And by this approach MARA is embedding themselves into the local energy and regulatory stack across markets, and rather than buying power on the market, they’re becoming part of the energy sourcing and deal structuring process. I think the synergy of both vertical and geographic integration is a long-term competitive moat that will potentially give MARA lots of geographic control over where and how it plugs into the global compute economy, with latency optimization, and energy cost arbitrage - all key components to scaling AI workloads. The ultimate payoff for this vertical and geographic integration approach is that when this is fully operationalized, there is high potential for MARA to see energy procurement and compute deployment cycles optimized, which will potentially translate to lower cost of compute per workload, and boost financials through improved margins and capital efficiency, ultimately creating long-term shareholders' value. Valuation Gets More Attractive MARA’s huge EPS beat naturally makes MARA’s valuation attractive. And I think the market reaction to the headline bottom line beat has been muted because a large portion of the upside came from unrealized gains or paper profits tied to fair value accounting of its Bitcoin holdings. Data by YCharts I, however, think that the case for MARA is strengthening as Bitcoin momentum reaccelerates. A further surge would mean MARA’s cost basis for its accumulated BTC becomes increasingly favorable. Though it is difficult to calculate a finite figure for the cost basis of MARA’s Bitcoin holdings as they include both BTC purchased on the open market and BTC mined from operations, spanning several quarters at several prices, a rough estimate puts the cost basis way below $100,000, if we go by the notable purchases made since last year. In August last year, 4,144 BTC worth $249 million was purchased at an average price of $59,500 , following a $300 million raise. Then in November, 6,474 BTC was purchased at an average price of $95,0000, following a $1 billion convertible note offering. Then following another convertible note offering last December, MARA purchased 15,574 BTC at an average of $98,500 per BTC. If BTC continues its upward surge, MARA’s mark to market under fair value accounting would result in multi-billion dollar mark-up to equity and potentially another blowout earnings quarter. Even if fair value gains are dismissed today, the ability to convert paper gains into capital, or generate yield from these assets, sets up MARA for a fundamental revaluation. At BTC price of, say, $120k to $150k (which is just about 2% to 20% away from current price of $118k), MARA would have an advantaged cost basis, potentially giving it multiple levers for an upside. Q3 is gearing up to be another great quarter for MARA, considering the fact that BTC has already hit a new all time high in Q3, and MARA’s mark to market fair value accounting will likely be coming with a higher BTC figure compared to Q2. Risks and Takeaway MARA’s balance sheet is now more exposed to BTC than ever. And what has turned out to be an impressive quarter in Q2 could as well easily turn out to be a dismal one if BTC sees significant price decline. As MARA’s own management puts it in the Q2 earnings call: Regarding the current price of bitcoin, our view is that things feel a little frothy at the moment. While there is persistent demand for bitcoin, this is balanced by an ample supply owing to long-term holders taking profits from bitcoin held in some cases since the earliest years of bitcoin's infancy. Supply is currently being absorbed relatively well. But if the buying demand were to subside, we could see downward pressure as sellers attempt to lock in gains at these high price points. With our recent convertible notes offering, we have significantly bolstered our balance sheet to have the flexibility to act across a range of strategic priorities, including opportunistic bitcoin purchases debt repurchase, M&A and general corporate purposes. - Frederick Thiel, CEO, MARA Holdings, during the Q2 earnings call One of the most important takeaways from Q2 earnings is that beyond the exposure to BTC and the upside it offers if BTC keeps up momentum, MARA is now vertically integrating not just to mine Bitcoin better, but to own more of the value chain across digital energy, compute infrastructure, and AI markets. Based on how this strategy is well executed, this potentially opens up undervalued opportunities for MARA, which the market may be missing currently.

2025-07-30 20:37

More on Crypto VanEck Mid-July 2025 Bitcoin ChainCheck Profit Taking Continues To Weigh On Cryptocurrencies Ethereum's Success Won't Translate Into Altcoins BlackRock's ETH ETF sees $223M inflows, pushing holdings past 3M ETH eToro plans to launch tokenized stocks on Ethereum blockchain

2025-07-30 20:15

Summary LTCN's spot ETF conversion is delayed, with SEC approval now expected by October, but the NAV discount has nearly vanished, reducing arbitrage appeal. Market sentiment for a Litecoin ETF is lukewarm, with minimal fund flows and low investor demand compared to Solana and Ethereum products. Despite strong odds for ETF approval, Litecoin lacks the narrative and capital inflows driving other digital assets, signaling limited near-term upside. I downgrade LTCN to 'hold' as upside from ETF conversion is minimal and market interest in Litecoin investment products remains weak. Back in April, I wrote about the Grayscale Litecoin Trust ( OTCQX:LTCN ) and liked the fund on the possibility of spot ETF conversion as early as May. Grayscale had previously applied to convert the fund to a spot ETF earlier in the year and ETF analysts have remained optimistic that the United States Securities and Exchange Commission would grant approval for such a product. One of the key issues for LTCN historically is that, as a closed-end fund, shares cannot be redeemed for the Litecoin ( LTC-USD ) that is underlying the fund. This is less of a problem when fund shares are in line with net asset value, or NAV. It can be quite frustrating when the shares trade at a large discount to their underlying value: LTCN Premium/Discount Rate (CoinGlass) Such was the case during the 'Crypto Winter' of 2022 when the fund briefly traded at a 65% discount to NAV. That proved to be an unbelievable buying opportunity as the shares were trading at a 400% premium 15 months later. We currently find the fund at a 0.5% discount to NAV. For me, this is not a compelling enough arbitrage to justify buying LTCN solely on expectations of a spot ETF conversion. The real question though might be this; does the market even want a spot Litecoin ETF? I'm not very convinced. Market Expectations for a spot ETF Obviously, the SEC did not approve the conversion of LTCN to ETF back in May. Prior to the agency's official delay disclosed on July 29th , August 11th was a deadline date for approval: The 180th day after publication of the proposed rule change is August 11, 2025. The Commission is extending the time period for approving or disapproving the proposed rule change for an additional 60 days. With the SEC now pushing the approval time period for another 60 days, October 10th is now the date that LTCN shareholders should be mindful of. LTC Daily Chart (TrendSpider) Given the recent 58% run up in the price of LTC from late-June to late-July, this delay in ETF approval could theoretically put pricing pressure on LTC and by extension LTCN over shorter term time horizons. That said, the market still expects Litecoin ETFs in the United States by the end of the year: Spot LTC ETF Odds (Polymarket) Bettors through prediction markets like Polymarket have LTC ETF approval odds this year at 82%. This is on an admittedly low betting volume of just $58k, but these markets have shown success in being able to price-in catalysts; especially when it comes to futures markets concerning politics or regulations. Investor Indifference The real question is does the market even really care about a LTC ETF should one be approved? I would posit that the biggest driver of 'adoption' in the Digital Asset ecosystem in 2025 is capital flows through investment products rather than any real utility offered by chain-native assets. On-chain usage of most of the large blockchain networks is actually down compared to previous cycle highs yet demand for products tied to the native assets of those chains has been robust - specifically for Bitcoin ( BTC-USD ) and more recently Ethereum ( ETH-USD ). Such has not been the case for Litecoin where fund flows were actually down month-to-date through July 26th: Asset (mil) MTD Flows YTD Flows AUM Bitcoin $5,474 $20,472 $179,819 Ethereum $4,907 $7,790 $28,314 Multi-asset -$70.5 $13 $7,109 Solana ( SOL-USD ) $551.5 $844 $2,473 XRP ( XRP-USD ) $311.7 $721 $2,255 Sui ( SUI-USD ) $22.5 $127 $349 Litecoin -$1.2 $4 $247 Source: CoinShares, as of July 26th Year-to-date flows into Litecoin investment products have only amounted to $4 million dollars and at just $247 million in AUM, Litecoin's total investment assets under management are actually lower than the month-to-date inflows of Solana - which is also potentially getting a spot ETF in the US market this year. This does not lend much confidence that there will be any real demand for LTC even if LTC ETFs hit the US market later this year. However, Ethereum's fund flow story was quite bad last July before the spot ETH ETFs were approved as well: Fund Flows in July 2024 (CoinShares) If we look at the fund flows into Ethereum back in July 2024, we can see the year to date flows were putrid prior to July. At just $103 million in year-to-date flows through July 20th 2024, the investment demand for ETH was about half of 1% of Bitcoin's prior to spot ETH approvals just a few days later. While July did indeed turn around what had been a negative fund flow story through the first half of 2024 for Ethereum, there is no such activity for Litecoin this time around despite the clear demand for Solana prior to presumed spot ETF approvals. Closing Thoughts None of this means Digital Asset investors should avoid Litecoin or even LTCN for that matter. Like Polymarket's bettors, I do think we'll see the fund converted to a spot ETF later this year. Fundamentally, the chain is still being used. We can see this through long-term trends in both daily active addresses and daily transactions. But the crypto market is not one that always rewards utility. Unlike Solana or Ethereum, there is no stablecoin angle that can propel LTC higher. I'm still personally long LTC-USD, but I'm downgrading LTCN to a 'hold.' The fund is trading essentially at NAV, which minimizes upside as a potential spot-ETF approval arbitrage. But more importantly, narratives and fundamentals only matter if the market cares. And right now, the market is showing very little interest in Litecoin investment products.

2025-07-30 20:05

More on Coinbase Coinbase Is No Longer Just A Crypto Exchange - It's Becoming The AWS Of Finance Coinbase: Sell Crypto Legislation (GENIUS Act) Hype Rethinking CONY As Coinbase Rallies - Tactical Use, Not Income Plan JPMorganChase, Coinbase collaborate for easier crypto buying Coinbase seen widening losses to seventh consecutive session

2025-07-30 17:58

Summary BTCI offers a unique way to generate high monthly income from Bitcoin's volatility, with a current annualized yield exceeding 25%. The ETF uses a synthetic covered call strategy, trading off some BTC upside for immediate income, making it ideal for income-focused investors. BTCI has delivered a 54% total return since inception, combining strong income with capital appreciation, though it underperforms pure BTC exposure. Given BTCI's track record and a pro-crypto environment, I am bullish and plan to add it to my income-focused portfolios for future upside. Bitcoin ( BTC-USD ) has proven many skeptics wrong over the past several years as it increased by 75.73% over the past year to $117,366. BTC is perceived as a store of value by many investors and despite large fluctuations in its share price it’s become an incredible investment opportunity that’s changed lives. BTC doesn’t generate income as it’s a decentralized digital currency which operates on a peer-to-peer network where the public transactions are recorded on the blockchain. NEOS Investments has created the NEOS Bitcoin High Income ETF ( BTCI ) for investors looking to generate large amounts of monthly income with exposure to BTC through exchange traded products that also provide the potential for capital appreciation when BTC appreciates. Some will say to just own BTC instead, but those investors are probably focused on capital appreciation rather than generating recurring income. BTCI is up 7% YTD and has delivered $9.98 of distribution income in 2025 which is a 16.90% yield on cost for anyone who started a position at the beginning of the year. BTCI has close to $500 million in assets under management (AUM) and after almost 1-year of being public its established a strong track record of income generation. I am bullish on several of the NEOS Investments ETF’s and the BTCI is going to be the 3 rd ETF from them that I allocate capital toward. BTCI is on track to deliver an annualized yield of roughly 27% and if BTC continues to appreciate I think BTCI will be in a position to not only appreciate in value but generate larger amounts of income in the future. Seeking Alpha Risks to investing in the NEOS Bitcoin High Income ETF While BTCI has an expected distribution rate that exceeds 25% there are significant risk factors that investors should consider. Everyone should do their own due diligence on BTCI before allocating capital toward it and not let the distribution yield blindly entice them. BTCI will invest at least 80% of its net assets in Spot Bitcoin Exchange Traded Products or options on Bitcoin Futures ETFs. BTCI’s share price will follow the direction of BTC which has been known to be extremely volatile over time. Investors could experience large price swings that result in capital depreciation. BTCI will utilize an option overlay strategy where they sell options to generate immediate income. If BTC continues to rally the options which are sold will likely limit BTCI’s upside potential causing it to underperform BTC and generate less capital appreciation. If for some reason BTC becomes less volatile in the future the premiums in the option market could change and BTCI may not be able to generate similar amounts of income as it currently does. BTCI is correlated to BTC and if for some reason BTC declines in value there is no risk mitigation through diversification or option strategies to soften the blow. Before allocating capital toward BTCI investors should understand that BTCI is focused on generating income and it will not track BTC on a 1:1 basis. Anyone interested in BTCI should conduct their own due diligence and understand that income is the primary focus of BTCI. How the NEOS Bitcoin High Income ETF is structured BTCI is an actively managed ETF that is focused on generating recurring income as its primary goal with a secondary objective of potentially producing capital appreciation. BTCI will invest in exchange-traded spot Bitcoin ETPs predominantly through a controlled foreign corporation while they will still have the ability to invest directly into Bitcoin ETPs. BTCI will obtain indirect Bitcoin exposure through ETFs that invest in Bitcoin future contracts. These ETFs will create exposure by deploying an option overlay strategy which includes selling put options and buying call options at the same stroke price. The spot Bitcoin ETP’s will track the price of BTC by holding actual BTC as their underlying asset. This will provide BTCI will the ability to benefit from BTC as the price appreciates by holding these Spot Bitcoin ETPs in a wholly owned and controlled foreign subsidiary. The option overlay strategy has 2 parts which include utilizing a synthetic strategy to gain exposure to the Bitcoin Futures ETF and writing call options on the Bitcoin Futures ETF to generate recurring monthly income. In order for BTCI to implement its Bitcoin Futures ETF options strategy it will invest in traditional exchange traded options or flexible exchange option (FLEX Options) that utilize the Bitcoin Futures ETF as the reference asset. BTCI’s exposure to the Bitcoin Futures ETF is obtained through utilizing the option market instead of owning BTC directly which will create synthetic exposure to BTC. The combination of puts and calls creates correlation to BTC in both directions. BTCI’s option income strategy is a synthetic covered call strategy because it doesn’t directly own the underlying asset its writing call options on. BTCI’s synthetic exposure to the Bitcoin Futures ETF will allow it to sell call options on Bitcoin Futures ETFs but it will be trading off most of the upside potential if BTC was to appreciate in value. If the Bitcoin Future ETF’s share price appreciates past the strike price of the options BTCI sells to generate income, then BTCI would lose money on those call options, and the loss will limit the upside potential of the synthetic long exposure. BTCI’s strategy will limit its participation in the gains from BTC’s upside potential as its converting potential upside of the price return growth of the Bitcoin Futures ETF and Spot Bitcoin ETPs into immediate income. The call options that BTCI sell will have expiration dates out 1 month and are expected to be held to expiration. Why I am bullish on the NEOS Bitcoin High Income ETF from an income perspective BTC has been volatile but a high performing asset over the years. The volatility on BTC has created an opportunity to generate large amounts of income from the premiums produced in the option market. So far BTCI has generated $13.97 in distributed income since October of 2024. BTCI’s monthly average distribution has been $1.40 since inception, which is a 2.21% monthly yield based on the current share price. The distributions BTCI has been able to generate haven’t fluctuated much and the yield is significantly higher than the risk-fee rate of return. Based on the current metrics, BTCI is on track to generate $16.77 of annualized distributable income which is an annualized yield of 26.54% based on the current share price. There aren’t many income investments that can replicate this level of distribution income especially in an environment where the Fed is expected to lower interest rates. I am bullish on BTCI’s ability to generate larger amounts of income in the future as the price for BTC climbs higher. Seeking Alpha In addition to distribution yields that exceed 25% BTCI has also produced a positive return for shareholders. Since inception BTCI has appreciated by $13.17 (26.34%) in addition to generating $13.97 (27.95%) of distributed income. The combination of appreciation and income has created a total return of 54.29% for shareholders of BTCI. While this has underperformed BTC, BTCI’s objective has never been to replicate the gains of BTC. The important metric to consider is that the way the option strategy is implemented doesn’t cap 100% of the upside for BTCI and there has been some upward trajectory to its share price. If you’re bullish on BTC and are looking for a way to generate income from it the BTCI’s structure is quite interesting as it’s establishing a track record of generating recurring income while being able to appreciate in value. Seeking Alpha Conclusion NEOS Investments has taken their call option strategies and applied it to BTC. While there will always be skeptics on BTC the historical performance of BTCI can’t be disputed. BTCI has been able to exceed a 2% monthly distribution yield and is on track to exceed an annualized distribution yield of 25%. I like BTCI because it provides indirect exposure to BTC and generates double-digit yields from its volatility. Now that there is clearer legislation in Washington and we seem to be in a pro-crypto environment I believe that BTC will continue to climb higher which is bullish for BTCI. If BTC continues to appreciate then BTCI could be in a position to generate larger levels of income while producing more capital appreciation for its shareholders. BTCI has established a strong track record of generating double digit yields without sacrificing all the upside potential which is bullish in my opinion. I plan on adding BTCI to my Dividend Harvesting Portfolio series on Seeking Alpha and potentially in my main income account as I see more upside potential in the future.

2025-07-30 16:30