Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

This information should be read in conjunction with the financial statements and notes included in Item 8 of Part II of this Report. The discussion and analysis which follows may contain trend analysis and other forward-looking statements. See "Cautionary Statement Concerning Forward-Looking Information" above.

You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, the Trust and the Sponsor undertake no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Report, as a result of new information, future events or changed circumstances or for any other reason after the date of this Report.

Overview/Introduction

The Invesco Galaxy Bitcoin ETF (the "Trust") is a Delaware statutory trust, formed on April 5, 2021. The Trust continuously issues Shares. The Trust operates pursuant to a Second Amended and Restated Declaration of Trust and Trust Agreement, dated as of January 5, 2024. The Shares began trading on the Exchange under the ticker symbol "BTCO" on January 11, 2024. The Trust offers Shares only to Authorized Participants in one or more blocks of 5,000 Shares based on the quantity of bitcoin attributable to each Share of the Trust.

Investment Objective

The investment objective of the Trust is for the Shares to reflect the performance of the spot price of bitcoin as measured using the Lukka Prime Bitcoin Reference Rate (the "Benchmark"), less the Trust's expenses and other liabilities. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding Bitcoin.

Determination of Net Asset Value

The Administrator calculates, and the Sponsor publishes, the Trust's Net Asset Value ("NAV") once each business day. To calculate the NAV, the Administrator totals the current market value of bitcoin in the Trust and any other assets, and subtracts any liabilities including accrued but unpaid expenses. The Trust's NAV is an amount denominated in U.S. dollars.

The Administrator also determines the NAV per Share, which equals the NAV of the Trust divided by the number of outstanding Shares. The NAV of the Trust and the NAV per Share are published by the Sponsor on each day that the Exchange is open for regular trading and are posted on the Trust's website, www.invesco.com/BTCO.

Valuation of Bitcoin

In seeking to achieve its investment objective, the Trust will hold bitcoin. The Trust values its Shares each Business Day as of 4:00 p.m. ET. The Trust applies FASB ASC Topic 820, Fair Value Measurement, in the valuation of bitcoin held by the Trust and for financial statement purposes. The value of bitcoin held by the Trust is determined based on the FMV price for bitcoin, reflecting the execution price of bitcoin on its principal market as determined each day by the Benchmark Provider. The FMV price for bitcoin reflects the price that would be received for bitcoin in a current sale, which assumes an orderly transaction between market participants on the measurement date of bitcoin on its "principal market," generally, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Trust determines its principal market (or in the absence of a principal market the most advantageous market) on a periodic basis to determine which market is its principal market for the purpose of calculating fair value for the creation of quarterly and annual financial statements. Issuer-specific events, market trends, bid/asked quotes of brokers and information providers and other data may be reviewed in the course of making a good faith determination of a security's fair value. The Benchmark is designed to provide an estimated fair market value price for bitcoin, based on the execution price of bitcoin on its principal market. In this regard, the Benchmark Provider seeks to identify a "principal market" for bitcoin each day by evaluating eligible bitcoin trading platforms across a variety of different criteria, including the trading platforms' oversight and governance frameworks, microstructure efficiency, trading volume, data transparency and data integrity.

Liquidity and Capital Resources

The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust's liquidity and capital resources needs.

The Trust will pay the Sponsor a unified fee of 0.25% per annum (the "Sponsor Fee") as compensation for services performed under the Trust Agreement. The Trust's only ordinary recurring expense is the Sponsor Fee. The Sponsor previously waived the entire Sponsor Fee on the first $5 billion of Trust assets for the 6-month period commencing on the day the Trust's Shares were initially listed on the Exchange. Effective July 11, 2024, this waiver expired, and the Sponsor is no longer waiving the Sponsor Fee.

The Sponsor Fee will be accrued daily and paid monthly in arrears in U.S. dollars, and will be calculated by the Administrator. The Administrator will calculate the Sponsor Fee on a daily basis by applying the 0.25% annualized rate to the Trust's total net assets.

To cover the Sponsor's Fee, and extraordinary expenses not assumed by the Sponsor, the Sponsor or its delegate will cause the Trust (or its delegate) to instruct the Execution Agent to convert bitcoin held by the Trust into U.S. dollars. The NAV of the Trust and the number of bitcoins represented by a Share will decline each time the Trust accrues the Sponsor Fee or any Trust expenses not assumed by the Sponsor. The Trust is not responsible for paying any costs associated with the transfer of bitcoin to or from the Trust in connection with paying the Sponsor Fee or in connection with creation and redemption transactions.

Except as noted below, the Sponsor has agreed to pay all of the Trust's ordinary expenses out of the Sponsor's unified fee, including, but not limited to, the Trustee's fees, the fees of BNYM (for its services as the "Administrator", "Transfer Agent", and "Cash Custodian"), the fees of the Bitcoin Custodian, the fees of the Execution Agent, Exchange listing fees, SEC registration fees, printing and mailing costs, legal costs and audit fees. The Sponsor also paid the costs of the Trust's organization.

The Trust may incur certain extraordinary expenses that are not assumed by the Sponsor. These include, but are not limited to, taxes and governmental charges, any applicable brokerage commissions, financing fees, Bitcoin network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders (including, for example, in connection with any fork of the Bitcoin blockchain), any indemnification of the Sponsor, Cash Custodian, Bitcoin Custodian, Administrator or other agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

The Trust from time to time will be required to sell bitcoin in such quantities as necessary to permit payment of the Sponsor Fee and any Trust expenses and liabilities not assumed by the Sponsor. The Sponsor has engaged the Execution Agent to sell bitcoin on the Trust's behalf in such circumstances. At the direction of the Trust, the Execution Agent will seek to sell bitcoin at approximately the price at which it is valued by the Trust and in the smallest amounts required to permit such payments as they become due, with the intention of minimizing the Trust's holdings of assets other than bitcoin. Accordingly, the amount of bitcoin to be sold may vary from time to time depending on the level of the Trust's expenses and liabilities and the market price of bitcoin.

The Trust has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Trust's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to Shareholders .

Cash Flows

A primary cash flow activity of the Trust is to raise capital from Authorized Participants through the issuance of Shares. This cash is used to invest in bitcoin.

As of the date of this Report, each of ABN AMRO Clearing Chicago LLC, BNY Mellon Capital Markets, LLC, Citadel Securities LLC, Goldman Sachs & Co., Jane Street Capital LLC, Jefferies LLC, JP Morgan Securities Inc., Macquarie Capital (USA) Inc., Marex Capital Markets Inc., Morgan Stanley & Co. LLC and Virtu Americas LLC has executed a Participant Agreement and are the only Authorized Participants.

Operating Activities

Net cash flow provided by (used in) operating activities was $111.1 million and $(321.5) million during the year ended December 31, 2025 and 2024, respectively. During the year ended December 31, 2025, $268.1 million was paid to purchase bitcoin and $379.1 million was received from sales of bitcoin for redemptions. During the year ended December 31, 2024, $670.5 million was paid to purchase bitcoin and $349.1 million was received from sales of bitcoin for redemptions.

Financing Activities

The Trust's net cash flow provided by (used in) financing activities was $(111.1) million and $321.4 million during the year ended December 31, 2025 and 2024, respectively. This included $268.1 million and $724.8 million from Shares purchased by Authorized Participants and $379.1 million and $403.5 million from Shares redeemed by Authorized Participants during the year ended December 31, 2025 and 2024, respectively.

Results of Operations

FOR THE YEAR ENDED DECEMBER 31, 2025 AND PERIOD JANUARY 11, 2024 TO DECEMBER 31, 2024

The following graph illustrates the percentage changes in (i) the market price of the Shares (as reflected by the line "Market"), (ii) the Trust's NAV (as reflected by the line "NAV"), and (iii) the closing levels of the Benchmark (as reflected by the line "Lukka Prime Bitcoin Reference Rate (USD)"). There can be no assurances that the price of the Shares or the Trust's NAV will exceed the Benchmark levels.

No representation is being made that the Benchmark will or is likely to achieve closing levels consistent with or similar to those set forth herein.

COMPARISON OF MARKET, NAV AND LUKKA PRIME BITCOIN REFERENCE RATE (USD)

FOR THE YEAR ENDED DECEMBER 31, 2025 AND FOR THE PERIOD JANUARY 11, 2024 TO DECEMBER 31, 2024

NEITHER THE PAST PERFORMANCE OF THE TRUST NOR THE PRIOR BENCHMARK LEVELS AND CHANGES, POSITIVE OR NEGATIVE, SHOULD BE TAKEN AS AN INDICATION OF THE TRUST'S FUTURE PERFORMANCE.

NEITHER THE PAST PERFORMANCE OF THE TRUST NOR THE PRIOR BENCHMARK LEVELS AND CHANGES, POSITIVE OR NEGATIVE, SHOULD BE TAKEN AS AN INDICATION OF THE TRUST'S FUTURE PERFORMANCE.

FOR THE YEAR ENDED DECEMBER 31, 2025 AND FOR THE PERIOD JANUARY 10, 2024 TO DECEMBER 31, 2024

Trust Share Price Performance

For the year ended December 31, 2025, the Exchange market value of each Share decreased from $93.22 per Share to $87.20 per Share. The Share price low and high for the year ended December 31, 2025 and related change from the Share price on December 31, 2024 was as follows: Shares traded at a low of $76.59 per Share (-17.84%) on April 8, 2025, and a high of $125.18 per Share (+34.28%) on October 6, 2025. The total return for the Trust on a market value basis was -6.46%.

Bitcoin (BTC) ended 2025 in negative territory despite strong gains during the second and third quarters. After a weak first quarter-driven by macroeconomic worries, deteriorating sentiment, heavy outflows from crypto ETPs, and a confidence shock following the ByBit hack-BTC staged a robust recovery mid-year. Improving risk appetite, renewed institutional demand, accelerating ETP inflows, and a series of supportive U.S. policy developments-including progress on the CLARITY Act, GENIUS Act, Anti-CBDC Surveillance Act, and an executive order permitting crypto in retirement accounts-collectively served as meaningful tailwinds for digital assets. Additional support came from the initiation of Federal Reserve rate cuts and rising uncertainty around the potential U.S. government shutdown, which bolstered interest in alternative assets like BTC. However, the fourth quarter fully reversed these gains. A broad risk-off environment took hold as hawkish Federal Reserve signals emerged ahead of the December rate cut, compounded by the actual U.S. government shutdown, widespread forced liquidations of leveraged positions, and technical breakdowns as BTC failed to hold key support levels. Market sentiment deteriorated sharply and U.S. spot crypto ETPs posted record outflows in November, as the Crypto Fear & Greed Index plunged into "extreme fear."

For the period January 11, 2024 (commencement of trading) to December 31, 2024, the Exchange market value of each Share increased from $46.30 per Share to $93.22 per Share. The Share price low and high for the period ended December 31, 2024 and related change from the Share price on January 11, 2024 was as follows: Shares traded at a low of $39.11 per Share (-15.53%) on January 23, 2024, and a high of $106.49 per Share (+130.00%) on December 17, 2024. The total return for the Trust on a market value
basis was +101.34%.

For the period January 11, 2024, through December 31, 2024, bitcoin's (BTC) spot price rallied 103%, leading to strong gains for the Trust. The rally was initially driven by spot bitcoin ETP demand following their historic launch on January 11, 2024, improving macroeconomic sentiment supporting investor risk appetite, and the anticipation leading up to the April 2024 bitcoin halving event, which has historically provided upside potential for BTC. However, after BTC hit a record high of $73,000 in March 2024, prices trended lower until the end of the third quarter, waiting for a catalyst to break out. The third quarter was a positive quarter for BTC as the kickoff of the Federal Reserve interest rate easing cycle and increased chances of a Trump victory fueled the bullish sentiment around cryptocurrencies. The launch of spot Ethereum ETPs in July may have also been a supportive catalyst. However, more than half of 2024's gains were posted in the fourth quarter, following President Trump's re-election as President of the United States. In addition to saying that he would be a "crypto president", he also touted major plans for the crypto industry that, if implemented, could lead to significant regulatory progress, increased institutional adoption, and formal legitimization of the asset class in traditional finance, all of which would support prices.

Trust Share Net Asset Performance

For the Year Ended December 31, 2025, the NAV of each Share decreased from $93.28 per Share to $87.22 per Share. The falling price for bitcoin during the period ended December 31, 2025 contributed to an overall 6.26% decrease in the level of the Benchmark. The total return for the Trust on a NAV basis was -6.50%.

Net income (loss) for the period ended December 31, 2025 was $(72.3) million, primarily resulting from net realized gain (loss) of $62.4 million, net change in unrealized gain (loss) of $(133.2) million and net operating expenses of $1.5 million.

For the period January 11, 2024 (commencement of trading) to December 31, 2024, the NAV of each Share increased from $46.29 per Share to $93.28 per Share. The rising price for bitcoin during the period ended December 31, 2024 contributed to an overall 101.23% increase in the level of the Benchmark. The total return for the Trust on a NAV basis was +101.51%.

Net income (loss) for the period ended December 31, 2024 was $406.1 million, primarily resulting from net realized gain (loss) of $60.3 million, net change in unrealized gain (loss) of $346.6 million and net operating expenses of $0.7 million that included $0.5 million of Sponsor Fees waived that expired effective July 11, 2024.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor's management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period covered by this report.

There were no material estimates, which involve a significant level of estimation uncertainty and had or are reasonably likely to have had a material impact on the Trust's financial condition, used in the preparation of these financial statements.

Please refer to Item 8 of Part II Note 2 - Summary of Significant Accounting Policiesto the financial statements for further discussion of our accounting policies.