10-Q: 21Shares Ethereum ETF Reports Q1 2026 Results

21Shares Ethereum ETF's Net Asset Value decreased by 41.88% in Q1 2026, primarily driven by a 29.33% drop in Ether's price.

Summary

• The 21Shares Ethereum ETF (TETH) reported a significant decrease in its Net Asset Value (NAV) for the first quarter of 2026.
• NAV fell by 41.88% from $31,298,450 on December 31, 2025, to $18,191,793 on March 31, 2026.
• This decline was largely attributed to a 29.33% decrease in the price of Ether, which dropped from $2,971.02 to $2,094.53 during the quarter.
• The Trust experienced a net decrease in outstanding Shares, with 1,690,000 Shares created and 2,060,000 Shares redeemed.
• Net assets resulting from operations for the quarter were a loss of $7,993,753.
• The Trust generated $62,288 in Staking Rewards, offset by a Staking Fee of $15,555.
• The Sponsor Fee was fully waived during the quarter, effective October 9, 2025, for a period of one year.
• The Trust made cash distributions to shareholders totaling $41,605 from Staking Rewards.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant decline in the Trust's Net Asset Value and the underlying Ether price, despite positive elements like staking rewards and a fee waiver.

Positives

• The Trust earned $62,288 in Staking Rewards during the quarter.
• The Sponsor continued its voluntary fee waiver for the Sponsor Fee, which began on October 9, 2025, and will last for one year.
• The Trust made cash distributions to shareholders totaling $41,605 from Staking Rewards.

Negatives

• The Net Asset Value (NAV) of the Trust decreased by 41.88% in Q1 2026.
• The price of Ether experienced a significant decline of 29.33% during the quarter.
• The Trust reported a net decrease in outstanding Shares.
• The Trust incurred a net loss of $7,993,753 from operations during the quarter.
• Realized losses on the sale of Ether for redemptions and income distribution totaled $9,135,133.

Risks

• The Trust's investment strategy is concentrated in a single asset (Ether), making it highly exposed to market risks associated with Ether and digital assets.
• Temporary lock-up periods or transfer restrictions from staking could limit the Trust's ability to meet redemptions.
• The evolving regulatory landscape for digital assets, including staking, poses a risk to the Trust's operations and tax status.
• The enforceability of the Trust Agreement's restrictions on derivative actions by shareholders has not been definitively established.
• Shareholders may face substantial difficulty in locating other shareholders to meet the 10% ownership threshold required for derivative actions due to shares being held in book-entry form through DTC.

Future Outlook

The filing does not provide specific forward-looking financial guidance. However, it reiterates the Trust's investment objective to track the performance of Ether, adjusted for expenses, and reflect staking rewards, while acknowledging the inherent risks and uncertainties in the digital asset markets and regulatory environment.

Management Comments

• The Trust's NAV decreased from $31,298,450 on December 31, 2025, to $18,191,793 on March 31, 2026, a 41.88% decrease, primarily due to a 29.33% decrease in the price of Ether.
• The decrease in NAV was further amplified by a net decrease in outstanding Shares, as redemptions exceeded creations during the quarter.
• The Sponsor Fee was fully waived during the quarter, and the Trust had no net expenses other than the Staking Fee.
• The Trust made cash distributions to Shareholders derived from a portion of the Ether received as Staking Rewards.

Industry Context

StockSavvy.ai notes that this filing reflects the significant volatility experienced in the Ether market during Q1 2026, impacting the performance of Ether-based ETFs. The continued reliance on staking rewards as a source of income and the ongoing Sponsor Fee waiver are key strategic elements for the Trust in managing expenses and providing value to investors amidst market fluctuations.

Comparison to Industry Standards

• The performance of the 21Shares Ethereum ETF is directly tied to the price of Ether. During Q1 2026, Ether experienced a significant price decline, which is a common risk for all Ether-focused investment products.
• Competitors such as Grayscale Ethereum Trust (ETHE) and other Ether ETFs would have experienced similar NAV declines due to the market downturn. Specific comparative performance data is not provided in this filing.
• The Trust's staking strategy, aiming to generate additional yield, is a feature increasingly adopted by digital asset funds to offset management fees and enhance returns, though the actual rewards are subject to network conditions and staking percentages.

Legal Proceedings

• As of March 31, 2026, the Trust was not subject to any material legal proceedings, nor were any material legal proceedings threatened against the Trust.

Related Party Transactions

• The Sponsor, 21Shares US LLC, is a related party to the Trust.
• The Trust paid a Staking Fee of $15,555 for the three months ended March 31, 2026, representing 25% of Staking Rewards paid to the Sponsor.
• The Sponsor Fee was fully waived during the quarter.
• The Trust engaged in no digital asset trading activity with FalconX Bravo, Inc. (a subsidiary of FalconX, the ultimate parent of the Sponsor) during the quarter.

Stakeholder Impact

• Shareholders experienced a significant decrease in the Net Asset Value of their holdings due to market conditions.
• Shareholders received cash distributions from Staking Rewards.
• The Sponsor continues to absorb operating expenses through a fee waiver, benefiting shareholders by reducing immediate costs.

Next Steps

• The Trust will continue to operate with the objective of tracking Ether's performance and reflecting staking rewards.
• The Sponsor will continue its one-year voluntary waiver of the Sponsor Fee, ending October 8, 2026.
• The Trust will continue to make quarterly cash distributions to shareholders from Staking Rewards, as earned.

Key Dates

Recommendation

The filing indicates a significant decline in the Trust's Net Asset Value due to market conditions, which is a primary concern for investors. While staking rewards and a fee waiver are positive, the overall performance is heavily dictated by the volatile Ether market. Therefore, a 'hold' recommendation is appropriate, pending a recovery in Ether prices or a change in market dynamics.

Keywords

21Shares Ethereum ETF, TETH, Ethereum ETF, Form 10-Q, Quarterly Report, Ether, Digital Assets, Cryptocurrency, Staking Rewards, Net Asset Value, SEC Filing