BlackRock's Ethereum ETF Set for Reverse Split, Potentially Boosting Share Price
BlackRock has announced that its Ethereum (ETH) physically-settled ETF, iShares Ethereum Trust ETF (ETHA), will undergo a 1 for 3 reverse split on October 5. The existing three shares of ETHA will be merged into one share.
This means that the number of outstanding shares of ETHA will decrease proportionally, causing the net asset value (NAV) per share to increase accordingly. However, this merger itself will not change the total investment amount or the overall asset value of the trust.
According to Eric Balchunas, a senior ETF analyst at Bloomberg, if we assume the current price level, the NAV of ETHA is expected to rise from approximately $14 to $42 per share after the reverse split. This could lead to a reduction in trading costs for investors, with the spread potentially decreasing from around 7 basis points (bps) to 2 bps.
Balchunas also highlighted that ETF issuers consider a 7 bps spread a significant issue and are working to reduce it, while cryptocurrency exchanges charge much higher fees of around 140 bps.