BlackRock's ETHA ETF Set for Rare Reverse Split, Trading Costs May Plummet

BlackRock's iShares Ethereum Trust ETF (ETHA) is about to undergo a rare reverse split on October 6. The move will combine every three ETHA shares into one, effectively lifting the ETF's nominal price from $14.15 to around $42.45.

This action was approved by ETHA's sponsor on July 31 and has been filed with the SEC. Unlike typical reverse splits, which are often used by struggling companies to avoid delisting, BlackRock is not giving a reason for this move. However, the fund's prospectus does allow its sponsor to take such actions when they believe the secondary-market price has moved outside a desirable trading range.

The decision may be aimed at raising the nominal value of the shares, as ETHA's share price has fallen by more than 37% this year. This drop can be attributed to Ethereum's broader price struggles, which have seen its value decline from over $3,200 at the beginning of the year to around $1,870.

The reverse split will reduce ETHA's outstanding share count from roughly 384 million to 128 million and place it above its major rivals by nominal share price. However, the transaction will leave shareholders' investment values unchanged, as they will receive one new share for every three old shares held.