Company: DEFI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001999371-25-017892
Chunk: 23

Company: Tidal Commodities Trust I
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 8
Chunk 23
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 changes in interest rates, changes in
balances of payments and trade, U.S. and international inflation rates, currency valuations and devaluations, U.S. and international
economic events, and changes in the philosophies and emotions of market purchasers. Because the Predecessor Fund invested in futures
contracts in a single cryptocurrency, it was not a diversified investment vehicle, and therefore may have been subject to greater
volatility than a diversified portfolio of stocks or bonds or a more diversified commodity or cryptocurrency pool. Likewise, because
the Fund invests in spot bitcoin and futures contracts in a single cryptocurrency, it is not a diversified investment vehicle,
and therefore may be subject to greater volatility than a diversified portfolio of stocks or bonds or a more diversified commodity
or cryptocurrency pool.

Market Risk

Trading in instruments such as futures
contracts will involve the Fund entering into contractual commitments to purchase or sell specific amounts of cryptocurrencies
at a specified date in the future. The gross or face amount of the contracts is expected to significantly exceed the future cash
requirements of the Fund as the Fund intends to close out any open positions prior to the contractual expiration date. As a result,
the Fund’s market risk is the risk of loss arising from the decline in value of the contracts, not from the need to make
delivery under the contracts. The Fund considers the “fair value” of derivative instruments to be the unrealized gain
or loss on the contracts. The market risk associated with the commitment by the Fund to purchase a specific cryptocurrency will
be limited to the aggregate face amount of the contacts held.

The exposure of the Fund to market risk
will depend on a number of factors including the markets for the specific cryptocurrency, the volatility of interest rates and
foreign exchange rates, the liquidity of the Bitcoin Futures Contracts markets and the relationships among the contracts held by
the Fund.

Credit Risk

When the Fund enters into futures contracts,
it will be exposed to the credit risk that the counterparty will not be able to meet its obligations. For purposes of credit risk,
the counterparty for the futures contracts traded on the Chicago Board of Trade, Intercontinental Exchange and CME is the clearinghouse
associated with those exchanges. In general, clearinghouses are backed by their members who may be required to share in the financial
burden resulting from the non-performance of one of their members, which should significantly reduce credit risk. Some foreign
exchanges are not backed by their clearinghouse members but may be backed by a consortium of banks or other financial institutions.
Unlike in