Net asset value

Imagine a product with assets of USD 102,000,000 and liabilities of USD 2,000,000. Subtracting them leaves net assets of USD 100,000,000. With 2,000,000 shares outstanding, NAV is USD 50 per share. These are our own illustrative figures in US dollars. The last step is crucial: allocating net assets across the shares. Without it, we would be comparing the size of the whole product with the price of one unit, which are different things. [1]

In the same model, an additional expense liability of USD 100,000 arises and nothing else changes. Net assets fall to USD 99,900,000 and NAV per share to USD 49.95. The BTC price could have stayed unchanged. An unpaid expense counts as a liability once accrued. When the product pays it, both cash and the corresponding liability decrease; do not deduct an accrued expense again at payment. This is our own illustration, not an IBIT fee schedule; IBIT is iShares Bitcoin Trust ETF. [1] [2]

Different exchanges can display slightly different prices at the same time. A product therefore needs a defined valuation method. The IBIT prospectus dated July 31, 2025 uses the CF Benchmarks Index: a reference price calculated as of 16:00 ET from trades during 15:00–16:00 ET. ET means US Eastern Time. The inputs are spot BTC/USD trades, exchanges of actual bitcoin for dollars, rather than prices of futures contracts. Nor is the value just an arbitrarily chosen last quote. The particular product’s rules determine the index and the alternative procedure when data is unreliable. [2]

The cited IBIT calculates official NAV once each business day. After review, it is typically published by 17:30 ET and generally no later than 20:00 ET. A figure can therefore describe an earlier moment than when it appears online. Alongside it is IIV, an indicative intraday value per share. This helps estimate changes during the day, but is not continuously approved official NAV. Comparing figures requires knowing not just their date and currency but also their valuation time and method. [2]

With an illustrative NAV of USD 50 and exchange price of USD 51, a share trades at a 2% premium, above its net asset value per share. At USD 49 it trades at a 2% discount, below that value. The percentage difference is (price/NAV−1)×100. The comparison is meaningful only for values from comparable times. An old NAV beside a fresh price may suggest a gap actually caused by bitcoin moving in the meantime. A gap alone does not guarantee risk-free arbitrage, meaning profit from price differences: costs, time and the ability to execute the trade affect the result. [2] [3]

Return to net assets of USD 100,000,000 and 2,000,000 shares. A creation brings in USD 2,000,000 of assets and adds 40,000 shares. The new calculation is 102,000,000/2,040,000=50 USD. We assume an appropriately valued contribution and no additional costs. The product is larger, but there are more units sharing its assets. Its size increases, not NAV per share. An inflow alone is not automatically a gain for an existing shareholder. [1] [3]

A purely mechanical share split illustrates a similar point. In a 2:1 split, net assets stay at USD 100,000,000 while 2,000,000 shares become 4,000,000. NAV per share falls from USD 50 to USD 25. The holder has twice as many units, not twice the wealth; splitting the units alone has not changed their share of the total value. Historical comparisons therefore need to account for splits and any distributions to investors. Otherwise a change of units can look like a gain or loss. [1]

For the cited IBIT, only APs, Authorized participants, can create or redeem whole baskets of 40,000 shares: financial institutions with the necessary contractual authorisation. The NAV figure does not give an ordinary investor a right to have a single share redeemed directly at that price or to control the product’s BTC with personal keys. Private keys are the information used to authorise bitcoin spending. NAV is therefore best read alongside assets, liabilities, share count, currency and valuation time. A chart number alone cannot supply that context. [2]