The $1.226 Payout Is Not Free Money
Yield seekers are circling. On December 24, 2025, the Bitwise Trendwise Bitcoin and Treasuries Rotation Strategy ETF ($BITC) declared an annual distribution of $1.226 per share. At a closing price of $37.71, this represents a trailing yield of approximately 3.25%. On the surface, it looks like a win for a hybrid product. Beneath the surface, the math is less charitable. This distribution is essentially a forced liquidation of the fund’s gains or income in a year defined by extreme volatility. Investors of record on December 26 will see this cash, but they must also acknowledge the immediate drop in Net Asset Value (NAV) that follows. In the world of derivatives-based ETFs, high distributions often mask the underlying ‘bleed’ caused by futures roll costs and management fees.
Transparency is the first casualty of complexity. Per recent SEC filings, the BITC structure does not hold physical Bitcoin. It plays in the CME futures market. This means the $1.226 isn’t just ‘yield’ in the traditional sense. It is a cocktail of realized capital gains from futures contracts and interest from the Treasury collateral. For the retail investor, this creates a significant tax drag. Unlike a spot Bitcoin ETF where you control the timing of your capital gains, BITC forces the realization of these gains annually. You are paying for the privilege of the fund’s rotation, even if that rotation happened at the wrong time.
The Trendwise Mechanism Is a Lagging Indicator
Momentum can be a trap. The ‘Trendwise’ strategy relies on a proprietary signal involving the 10-day and 20-day Exponential Moving Averages (EMA) of Bitcoin prices. When the 10-day EMA crosses above the 20-day, the fund goes 100% into Bitcoin futures. When it crosses below, it retreats to the safety of U.S. Treasuries. This sounds disciplined. In practice, it is a recipe for ‘whipsawing’ in sideways markets. As of December 25, 2025, Bitcoin is stuck in a descending channel, trading near $87,300 after failing to hold the $90,000 level. Reuters reports that year-end volatility has cooled institutional appetite, leaving the 10-day EMA currently submerged beneath the 20-day average.
This means the fund is likely 100% in Treasuries right now. While the 10-year Treasury yield is currently hovering around 4.13%, the fund is charging a 0.90% expense ratio. You are essentially paying nearly 1% for a manager to hold government bonds that you could buy for free. The ‘Trendwise’ signal is designed to capture macro trends, but it frequently misses the first 5-10% of a breakout and remains exposed during the first 5-10% of a crash. It is a reactive strategy masquerading as a proactive one.
Allocation Status as of December 25, 2025
Treasury Yields Offer a Thin Cushion
Safety has a price. When the fund rotates into Treasuries, it seeks refuge from crypto’s 60% annualized volatility. However, the Treasury market in late 2025 is anything but stable. According to Bloomberg data, the 10-year yield has fluctuated between 3.9% and 4.4% over the last quarter. If the Fed pauses its rate-cutting cycle due to the persistent 2.7% inflation we saw in the November report, bond prices will face renewed pressure. For a ‘rotation’ fund, this creates a dual-threat environment. You lose money on the Bitcoin downside before the signal triggers, and then you lose money on the Treasury side as yields climb.
The $1.226 distribution should be viewed through this lens of ‘slippage.’ Slippage occurs not just in trade execution, but in the strategy itself. Every time the fund flips from Bitcoin to Treasuries, it incurs transaction costs and potential tax liabilities. Over a full market cycle, these frictions can erode the very outperformance the fund promises. The following table illustrates the current spread between the fund’s payout and the risk-free rate.
| Metric | BITC ETF Value | Benchmark / Note |
|---|---|---|
| Annual Distribution | $1.226 | Declared Dec 24, 2025 |
| Current Share Price | $37.71 | Dec 24 Close |
| Implied Yield | 3.25% | Net of 0.90% fee |
| 10-Year Treasury Yield | 4.13% | Risk-Free Benchmark |
| Bitcoin Momentum Signal | Negative | 10-day EMA < 20-day EMA |
The Hidden Cost of the ‘Optimum Roll’
Futures are not spot. Even when BITC is in its ‘Risk-On’ phase, it must deal with the roll yield. Bitcoin futures often trade in ‘contango,’ where the future price is higher than the current spot price. To maintain exposure, the fund must sell the expiring contract and buy a more expensive one. This constant ‘selling low and buying high’ creates a silent performance drag that spot Bitcoin ETFs simply do not have. While the $1.226 distribution might look like profit, it often represents the harvesting of these derivative positions regardless of whether the roll yield was positive or negative.
Skepticism is required when evaluating the ‘Stability’ of the Treasury allocation. The fund uses Treasuries as collateral for its futures positions. This means the Treasuries are doing double duty. If a sudden Bitcoin ‘flash crash’ occurs, the fund may be forced to liquidate Treasury positions at inopportune times to meet margin requirements. This is the ‘hidden’ risk of the rotation strategy. It assumes that the exit from Bitcoin will be orderly and that the entry into Treasuries will be safe. In a liquidity crisis, neither is guaranteed.
Looking toward the first quarter of 2026, the critical milestone for BITC holders will be the January 15 CPI announcement. If inflation remains sticky above 2.5%, the Fed may be forced to halt the rate cuts that have supported the Treasury side of this fund. A failure of Bitcoin to reclaim the 20-day EMA of $88,450 by mid-January will keep this fund locked in its 100% Treasury ‘Risk-Off’ stance, effectively turning your crypto investment into a high-fee bond fund during a potential market recovery.
