Grayscale Ethereum Trust ETF Assets Dip Amid Redemptions, NAV Rises

Ticker: ETHE · Form: 10-Q · Filed: 2025-11-05T00:00:00.000Z

Sentiment: mixed

Topics: Cryptocurrency ETF, Ethereum, Asset Management, SEC Filing, Investment Performance, Capital Flows, Digital Assets

Related Tickers: ETHE, GBTC, ETHEM, BCHG, LTCN

TL;DR

**ETHE's NAV per share is up, but significant redemptions are shrinking its asset base, signaling a cautious outlook despite increased liquidity.**

AI Summary

Grayscale Ethereum Trust ETF (ETHE) reported a net increase in net assets from operations of $607.59 million for the nine months ended September 30, 2025, a significant decrease from $1.44 billion in the same period of 2024. The Trust's total assets, consisting entirely of Ether, decreased to $4.43 billion as of September 30, 2025, from $4.74 billion at December 31, 2024. This decline was primarily driven by a net decrease in shares outstanding of 39.88 million for the nine months ended September 30, 2025, and a net change in unrealized appreciation on investment in Ether of -$568.53 million. Despite this, the Principal Market NAV per Share increased to $34.25 from $28.01 over the same period. The Trust also saw a substantial net realized gain on investment in Ether sold for redemption of shares, totaling $1.19 billion for the nine months ended September 30, 2025. Key business changes include the commencement of a redemption program and the listing of shares on NYSE Arca on July 23, 2024, alongside the engagement of multiple unaffiliated Authorized Participants and new custodial services from Anchorage Digital Bank N.A. as of August 8, 2025.

Why It Matters

This filing reveals a mixed picture for ETHE investors: while the Net Asset Value (NAV) per share has increased, total assets under management have declined due to significant share redemptions. The shift to NYSE Arca listing and the introduction of a redemption program in July 2024 have fundamentally changed the Trust's operational dynamics, offering more liquidity but also exposing it to greater capital outflows. For investors, this means increased flexibility but also potential volatility as large redemptions can impact the Trust's Ether holdings. The competitive landscape for crypto ETFs is intensifying, and ETHE's ability to attract and retain capital will be crucial for its long-term performance against rivals like Grayscale Bitcoin Trust ETF and Grayscale Ethereum Mini Trust ETF.

Risk Assessment

Risk Level: medium — The Trust experienced a net decrease in shares outstanding of 39.88 million for the nine months ended September 30, 2025, and a net decrease in net assets from capital share transactions of $918.37 million. This indicates significant capital outflows, which could impact the Trust's ability to scale and maintain its market position. The net change in unrealized appreciation on investment in Ether was a negative $568.53 million, highlighting the inherent volatility of cryptocurrency investments.

Analyst Insight

Investors should monitor ETHE's capital flows closely, particularly the trend in shares issued versus shares redeemed, as this directly impacts the Trust's asset base. While the rising Principal Market NAV per Share is positive, the substantial redemptions suggest a need for caution. Consider ETHE as a volatile, high-growth potential asset, but be aware of the ongoing capital outflows and the competitive landscape.

Financial Highlights

debt To Equity
0.0
revenue
$0
operating Margin
N/A
total Assets
$4.43B
total Debt
$0
net Income
$607.59M
eps
N/A
gross Margin
N/A
cash Position
$0
revenue Growth
N/A

Key Numbers

Key Players & Entities

FAQ

What were the total assets of Grayscale Ethereum Trust ETF as of September 30, 2025?

As of September 30, 2025, the total assets of Grayscale Ethereum Trust ETF were $4,425,198 thousand, or approximately $4.43 billion, which represents a decrease from $4,735,980 thousand at December 31, 2024.

How did the net assets from operations change for Grayscale Ethereum Trust ETF in the nine months ended September 30, 2025?

For the nine months ended September 30, 2025, the net increase in net assets resulting from operations for Grayscale Ethereum Trust ETF was $607,590 thousand, a decrease from $1,442,280 thousand in the same period of 2024.

What was the Principal Market NAV per Share for ETHE at September 30, 2025?

The Principal Market NAV per Share for Grayscale Ethereum Trust ETF was $34.25 as of September 30, 2025, an increase from $28.01 at December 31, 2024.

When did Grayscale Ethereum Trust ETF begin trading on NYSE Arca?

Grayscale Ethereum Trust ETF began trading on NYSE Arca on July 23, 2024, following the SEC's approval of an application under Rule 19b-4 on May 23, 2024.

Who is the current sole sponsor of Grayscale Ethereum Trust ETF?

Grayscale Investments Sponsors, LLC (GSIS) became the sole remaining sponsor of Grayscale Ethereum Trust ETF after May 3, 2025, having previously served as co-sponsor from January 1, 2025.

What was the impact of share redemptions on ETHE's net assets?

For the nine months ended September 30, 2025, the net decrease in net assets resulting from capital share transactions due to redemptions was $918,372 thousand, with 58,590,000 shares redeemed.

Which entities provide custodial services for Grayscale Ethereum Trust ETF?

As of July 23, 2024, Coinbase Custody Trust Company, LLC provides custodial services. Additionally, Anchorage Digital Bank N.A. entered into a custodial services agreement with the Sponsor on August 8, 2025.

How much Ether did Grayscale Ethereum Trust ETF hold as of September 30, 2025?

As of September 30, 2025, Grayscale Ethereum Trust ETF held 1,063,337.97367740 units of Ether, with a fair value of $4,425,198 thousand.

What was the net change in unrealized appreciation on investment in Ether for ETHE?

For the nine months ended September 30, 2025, the net change in unrealized appreciation on investment in Ether for Grayscale Ethereum Trust ETF was a decrease of $568,532 thousand.

What is the role of Authorized Participants for Grayscale Ethereum Trust ETF?

Authorized Participants are the only entities that may place orders to create or redeem Baskets of Grayscale Ethereum Trust ETF shares. Effective July 22, 2024, the Trust engaged a number of unaffiliated Authorized Participants, replacing Grayscale Securities, LLC.

Risk Factors

Industry Context

The digital asset investment trust landscape is evolving rapidly, with increasing institutional interest and regulatory scrutiny. Grayscale Ethereum Trust ETF operates within this dynamic environment, facing competition from other digital asset investment vehicles and the underlying Ether market itself. Key trends include the development of spot Ether ETFs in various jurisdictions and the ongoing maturation of blockchain technology.

Regulatory Implications

The Trust's operations are subject to evolving regulatory frameworks governing digital assets. Changes in regulations related to cryptocurrency custody, trading, and investor protection could impact the Trust's ability to operate, its costs, and the value of its Ether holdings. Compliance with these evolving rules is a critical operational consideration.

What Investors Should Do

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Key Dates

Glossary

Principal Market NAV per Share
The Net Asset Value (NAV) per share calculated based on the primary market where the Trust's shares are traded. It represents the value of the Trust's underlying assets per outstanding share. (Indicates the per-share value of the Trust's holdings, which increased to $34.25 from $28.01 over the period.)
Net realized gain on investment in Ether sold for redemption of Shares
The profit generated from selling Ether specifically to fulfill share redemption requests from investors. (Highlights the financial impact of significant redemption activity, totaling $1.19 billion for the nine months ended September 30, 2025.)
Net change in unrealized appreciation on investment in Ether
The change in value of the Ether held by the Trust that has not yet been sold. This reflects market price fluctuations. (Shows the impact of Ether's market performance on the Trust's asset value, resulting in a -$568.53 million change for the nine months ended September 30, 2025.)
Sponsor's Fee
The fee charged by the sponsor of the Trust for managing the fund and its operations. (Represents an operating expense for the Trust, which decreased to $64.64 million for the nine months ended September 30, 2025, from $152.94 million in the prior year.)
Net assets
The total value of the Trust's assets minus its liabilities. For this Trust, it primarily represents the value of its Ether holdings. (The total net assets decreased to $4.43 billion as of September 30, 2025, from $4.74 billion at December 31, 2024.)
Shares issued and outstanding
The total number of shares of the Trust that have been issued and are currently held by investors. (Decreased from 169.10 million at December 31, 2024, to 129.22 million at September 30, 2025, due to redemptions.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period ended September 30, 2024, the Grayscale Ethereum Trust ETF reported a significantly lower net increase in net assets from operations ($607.59 million vs. $1.44 billion). This decline is primarily driven by a substantial net realized gain on Ether sold for redemption of shares in 2024 ($2.46 billion) compared to $1.19 billion in 2025, and a less favorable net change in unrealized appreciation on Ether (-$568.53 million in 2025 vs. -$1.88 billion in 2024). The Sponsor's Fee also decreased substantially from $152.94 million to $64.64 million.

Filing Stats: 4,578 words · 18 min read · ~15 pages · Grade level 16 · Accepted 2025-11-05 16:11:06

Filing Documents

Forward-Looking Statements

Forward-Looking Statements 3 Industry and Market Data 3

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Statements of Assets and Liabilities at September 30, 2025 and December 31, 2024 4 Schedules of Investment at September 30, 2025 and December 31, 2024 5 Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 6 Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2025 and 2024 7 Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 8 Notes to the Unaudited Financial Statements 9 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 29 Item 4.

Controls and Procedures

Controls and Procedures 29

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 30 Item 1A.

Risk Factors

Risk Factors 30 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32 GLOSSARY OF DEFINED TERMS 33

SIGNATURES

SIGNATURES 38 2 Forw ard-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Ethereum Trust ETF (the "Trust"). Statements preceded by, followed by or that include words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue," the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust's operations, the plans of Grayscale Operating, LLC ("GSO"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC ("GSIS"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025 and the sole remaining sponsor thereafter (each of GSO and GSIS, the "Sponsor", as the context may require, and GSO and GSIS, together, the "Co-Sponsors"), and references to the Trust's future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K for the ye

– FINANCI AL INFORMATION

PART I – FINANCI AL INFORMATION:

Financial St atements (Unaudited)

Item 1. Financial St atements (Unaudited) GRAYSCALE ETHEREUM TRUST ETF STATEMENTS OF ASSET S AND LIABILITIES (UNAUDITED) ( Amounts in thousands, except Share and per Share amounts) September 30, 2025 December 31, 2024 Assets: Investment in Ether, at fair value (cost $ 866,418 and $ 608,668 as of September 30, 2025 and December 31, 2024, respectively) $ 4,425,198 $ 4,735,980 Total assets $ 4,425,198 $ 4,735,980 Liabilities: Sponsor's Fee payable, related party $ - $ - Total liabilities - - Net assets $ 4,425,198 $ 4,735,980 Shares issued and outstanding, no par value (unlimited Shares authorized) 129,218,500 169,098,500 Principal Market NAV per Share $ 34.25 $ 28.01 See accompanying notes to the unaudited financial statements. 4 GRAYSCALE ETHEREUM TRUST ETF SCHEDULES OF INVESTMENT (UNAUDITED) ( Amounts in thousands, except quantity of Ether and percentages) September 30, 2025 Quantity of Ether Cost Fair Value % of Net Assets Investment in Ether 1,063,337.97367740 $ 866,418 $ 4,425,198 100 % Total Investment $ 866,418 $ 4,425,198 100 % Net assets $ 4,425,198 100 % December 31, 2024 Quantity of Ether Cost Fair Value % of Net Assets Investment in Ether 1,417,788.29257515 $ 608,668 $ 4,735,980 100 % Total Investment $ 608,668 $ 4,735,980 100 % Net assets $ 4,735,980 100 % See accompanying notes to the unaudited financial statements. 5 GRAYSCALE ETHEREUM TRUST ETF STATEMENTS OF OPERATIONS (UNAUDITED) ( Amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Investment income: Investment income $ - $ - $ - $ - Expenses: Sponsor's Fee, related party 27,198 38,003 64,644 152,936 Net investment loss ( 27,198 ) ( 38,003 ) ( 64,644 ) ( 152,936 ) Net realized and unrealized

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