10-K: Bitwise Ethereum ETF Reports 2025 Financials Amid Ether Price Decline

Bitwise Ethereum ETF experienced a net decrease in assets and an 11.19% decline in NAV per share in 2025, driven by a drop in ether prices and significant redemptions.

Summary

• Net assets decreased to $343.685 million as of December 31, 2025, from $404.529 million at December 31, 2024.
• Principal Market NAV per share declined by 11.19% in 2025, from $23.96 to $21.28.
• The Trust reported a net decrease in net assets from operations of $54.736 million for the year ended December 31, 2025, compared to a net increase of $0.815 million for the period from July 22, 2024, to December 31, 2024.
• This was primarily due to a net realized and unrealized loss on investment in ether of $54.076 million in 2025, contrasting with a gain of $0.815 million in 2024.
• The CME CF Ether – Dollar Reference Rate – New York Variant (ETHUSD_NY) price of ether depreciated from $3,345.85 on December 31, 2024, to $2,964.79 on December 31, 2025.
• The Sponsor Fee, at 0.20% per annum, resulted in net expenses of $0.660 million in 2025, following a full waiver on the first $500 million of assets through January 22, 2025.
• The Trust redeemed 22,710,000 shares in 2025, compared to 2,190,000 shares in 2024, leading to a net decrease of 730,000 shares outstanding.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative filing due to significant declines in net assets and NAV per share, driven by ether price depreciation and substantial redemptions. While regulatory clarity is improving, the Trust's passive management and inherent risks of the crypto market present ongoing challenges.

Positives

• The Trust's disclosure controls and procedures were effective as of December 31, 2025.
• Internal control over financial reporting was effective as of December 31, 2025.
• The SEC formally dismissed its lawsuit against Coinbase entities in February 2025, reducing immediate legal risks for the Trust's service providers.
• The SEC formally repealed Staff Accounting Bulletin No. 121 (SAB 121) in early 2025, potentially easing barriers to crypto custody services for banks.
• The Trust maintains a robust cybersecurity risk management program, including third-party experts, annual training, and information security risk insurance.

Negatives

• Net assets decreased by $60.844 million in 2025, primarily due to ether price depreciation and net redemptions.
• Principal Market NAV per share decreased by 11.19% in 2025.
• The Trust experienced a net investment loss of $0.660 million in 2025, compared to $0 in 2024 due to the expiration of fee waivers.
• Net realized loss on ether sold for redemptions significantly increased to $54.632 million in 2025 from $9.412 million in 2024.
• Net change in unrealized appreciation on ether decreased to $0.307 million in 2025 from $10.227 million in 2024.
• The CME CF Ether – Dollar Reference Rate – New York Variant (ETHUSD_NY) price of ether depreciated from $3,345.85 to $2,964.79 during 2025.
• The Trust does not participate in staking, foregoing potential rewards or additional ether.
• Shareholders have limited statutory rights, and the Trust Agreement can be amended without their consent, potentially altering rights or imposing new fees.
• The Trust's reliance on a limited number of Authorized Participants and their ability to hedge may adversely affect liquidity and price.
• Custodians (Ether Custodian, Prime Execution Agent) have limited liability, and the Trust's assets are not FDIC or SIPC insured, exposing it to significant loss risk in case of insolvency or security breaches.
• The use of Trade Credits introduces risks of delayed transactions and potential liquidation of Trust assets if obligations are not met.

Risks

• Extreme volatility of ether trading prices, potentially leading to substantial loss of value.
• Uncertain medium-to-long-term value of Shares due to the newness and evolving nature of blockchain technologies and digital assets.
• Transition to proof-of-stake and ongoing scalability upgrades on the Ethereum network may impact ether's market value and the value of the Shares.
• Fluctuations in ether supply due to the Ethereum network's proof-of-stake transition, fee-burning mechanisms, and other deflationary factors could impact the value of the Shares.
• The Ethereum network faces significant scaling challenges, and efforts to improve transaction speed and throughput may not be successful, potentially hindering adoption and value.
• Smart contracts, including those relating to DApps, are new technology, and their development and operation may result in problems, reducing demand for ether or confidence in the Ethereum network.
• Reliance on Ethereum network validators and risks related to validator penalties, security vulnerabilities, and staking accessibility may adversely affect the Ethereum network's stability, security, and the value of ether.
• If the Ethereum network is used to facilitate illicit activities, businesses facilitating ether transactions could face increased criminal or civil liability or service cut-offs, negatively affecting ether's price.
• A temporary or permanent fork of the Ethereum blockchain could adversely affect the value of the Shares, and Shareholders may not receive the benefits of any forks or airdrops.
• The open-source structure of the Ethereum network protocol means core developers are generally not directly compensated, and a failure to properly monitor and upgrade the protocol could damage the network.
• Risk of a malicious actor or botnet obtaining control of more than 50% of the validating stake on the Ethereum network, manipulating the blockchain.
• Digital asset trading platforms on which ether trades may be exposed to fraud and market manipulation (wash trading, cyberattacks, front-running), negatively impacting ether's value.
• Decentralized governance of the Ethereum network and potential amendments to protocols could negatively impact performance.
• New competing digital assets (Solana, Cardano) and technologies (SWIFT, ACH, credit cards) may challenge ether's market dominance.
• Competition from Central Bank Digital Currencies (CBDCs) and emerging payments initiatives from financial institutions could adversely affect ether's value.
• The price of ether may be affected by stablecoins (Tether, USDC), their activities, and regulatory treatment, including risks of de-pegging or insufficient backing.
• Limited history and methodological risks of the Pricing Index, ERR, and CME Ether Real Time Price could cause inaccuracies in ether prices, undermining investor confidence.
• Investing in ether through the Trust is speculative and involves a high degree of risk, including the potential loss of the entire investment, as the Trust is passively managed.
• Limited history and potential illiquidity in ether markets may exacerbate losses and increase variability between the Trust's NAV and ether's market price.
• Buying and selling activity from Basket purchases and redemptions, along with potential suspension or rejection of orders, may adversely affect liquidity and the value of an investment in the Shares.
• Shareholders do not have statutory shareholder rights, and amendments to the Trust Agreement or Sponsor Agreement may occur without shareholder consent.
• The Trust's operations rely heavily on the Sponsor, whose limited staffing, potential discontinuance, and conflicts of interest could adversely impact management and stability.
• The market for Shares relies heavily on active participation from Authorized Participants, and any reduction or disruption could adversely affect liquidity and price.
• Inability of Authorized Participants and market makers to hedge their ether exposure may adversely affect liquidity and value.
• Security threats and cyber-attacks could result in halting Trust operations, loss of assets, or damage to reputation.
• Reliance on service providers (Ether Custodian, Cash Custodian, Prime Execution Agent) exposes the Trust to operational failures, conflicts of interest, and regulatory actions, leading to potential losses.
• Evolving regulatory frameworks for digital assets (SEC, CFTC, state laws) may impact ether's classification and treatment, influencing compliance and valuation strategies.
• DeFi protocols and digital assets used in them pose heightened regulatory concerns.
• International regulatory divergence may affect global acceptance and liquidity of digital assets.
• Regulatory changes could render ether ownership illegal, forcing involuntary termination and liquidation.
• Risk of the Trust or Sponsor being regulated as a money service business or money transmitter, leading to extraordinary expenses and decreased liquidity.
• Compliance with privacy, data protection, and cybersecurity laws and regulations may incur significant costs and risks of non-compliance.
• Tax risks: IRS may challenge grantor trust treatment, Shareholders could incur tax liability without distribution, changing tax treatment of ether, and tax liability from forks/airdrops.
• Exchange trading halts could adversely impact investors' ability to sell Shares.
• Lack of independent advisers representing investors in the Trust.
• Limited legal recourse against service providers and lack of direct insurance protection expose the Trust to risk of loss of its ether.
• The use of Trade Credits under the Agent Execution Model presents risks of delayed transactions and potential liquidation of Trust assets.
• Loss of critical banking relationships for, or failure of a bank used by, the Prime Execution Agent could adversely impact the Trust's ability to create or redeem Baskets, or cause losses.
• Prime Execution Agent routes orders through Connected Trading Venues; their loss or failure may cause losses for the Trust.
• Third parties may infringe upon or assert infringement of intellectual property rights.
• Pandemics, epidemics, and other natural and man-made disasters could negatively impact holdings and disrupt operations.

Future Outlook

The filing contains standard forward-looking statements disclaimers and discusses potential future regulatory changes, technological advancements in Ethereum (e.g., full danksharding, Pectra update in 2025), and the ongoing evolution of the digital asset market. It emphasizes that actual events or results may differ materially from expectations due to various risks, including market volatility, regulatory developments, and operational challenges within the digital asset ecosystem.

Management Comments

• The Sponsor does not believe that the Trust's ability to arrive at such a determination will have a significant impact on the Shares in the secondary market because it believes that the ability to create Shares would be reinstated shortly after such determination is made, and any entity desiring to create Shares would be able to do so once the ability to create Shares is reinstated.
• The Sponsor does not anticipate that the need to fair value ether will be a common occurrence.
• The Sponsor has analyzed applicable tax laws and regulations and their application to the Trust, and does not believe that there are any uncertain tax positions that require recognition of a tax liability as of December 31, 2025.

Industry Context

StockSavvy.ai notes that the Bitwise Ethereum ETF's performance in 2025 reflects the broader volatility and price depreciation experienced by the ether market. The significant net redemptions and decrease in net assets align with a period where ether's price declined, indicating that investor sentiment for spot ether ETFs can be highly reactive to underlying asset price movements. The ongoing regulatory developments, including the SEC's dismissal of lawsuits against major crypto entities like Coinbase and Binance, and the repeal of SAB 121, suggest a potential shift towards a more structured regulatory environment, which could reduce uncertainty for digital asset products. However, the continued scrutiny of DeFi and stablecoins, along with international regulatory divergence, highlights the persistent challenges and evolving landscape for the crypto industry. The competition from other smart contract platforms and the development of CBDCs also pose long-term threats to ether's market dominance.

Comparison to Industry Standards

• The Trust's 0.20% Sponsor Fee is competitive within the nascent spot crypto ETF market, comparable to or lower than some other recently launched spot Bitcoin and Ethereum ETFs.
• The reliance on Coinbase Custody and Coinbase, Inc. as Prime Execution Agent is a common industry practice for digital asset ETFs, with Coinbase Global being a leading institutional provider. However, the limited liability clauses and lack of FDIC/SIPC insurance are standard risks across the digital asset custody sector, contrasting with the higher protections in traditional financial asset custody.
• The use of the CME CF Ether – Dollar Reference Rate – New York Variant (Pricing Index) is an industry-standard benchmark for ether pricing, also used for CME ether futures contracts, providing a recognized valuation method.
• The 11.19% decrease in Principal Market NAV per-share for 2025 is a direct reflection of ether's market performance during that period, which saw a depreciation from $3,345.85 to $2,964.79, indicating the ETF effectively tracks its underlying asset's price movements, as expected for a passively managed fund.

Management Changes

Corporate Governance

Legal Proceedings

• The SEC filed a complaint against Coinbase entities in June 2023, alleging violations of federal securities laws, which was formally dismissed by the SEC in February 2025.
• The CFTC filed a lawsuit against Binance and its CEO, Changpeng Zhao, in March 2023 for allegedly disregarding provisions of the Commodity Exchange Act.
• The SEC filed lawsuits against Binance in June 2023, alleging sales of unregistered digital assets; a joint stipulation to dismiss the civil enforcement action was filed in May 2025.
• In the SEC vs. Ripple Labs, Inc. case, a summary judgment in July 2023 found institutional sales of XRP were securities transactions, but exchange sales were not. The SEC's motion to certify an interlocutory appeal was denied. A final judgment in August 2024 ordered Ripple to pay a $125 million civil penalty, which the SEC appealed in October 2024.
• The SEC brought charges against Kraken in November 2023, alleging operation as an unregistered securities exchange; Kraken's motion to dismiss was denied in August 2024, but the SEC agreed to dismiss the lawsuit with prejudice on March 3, 2025.
• The DOJ arrested and charged the developers of the Samourai Wallet mixing service in April 2024 with conspiracy to commit money laundering.
• U.S. prosecutors charged two individuals with exploiting the Ethereum blockchain to steal $25 million through Maximal Extractable Value (MEV) manipulation in May 2024.
• Larry Dean Harmon, operator of the cryptocurrency mixer Helix, was sentenced to three years in prison in November 2024 for laundering bitcoin.
• The DOJ announced charges in January 2026 alleging that USDT and other crypto assets were used to launder proceeds of corruption.

Related Party Transactions

• The Trust pays a unitary Sponsor Fee of 0.20% per annum of its ether holdings to Bitwise Investment Advisers, LLC (the Sponsor).
• Bitwise Asset Management, Inc. (BAM), the parent company of the Sponsor, purchased and later redeemed 8 Seed Shares for $200.00 prior to the Trust's commencement of operations.
• Bitwise Investment Manager, LLC (BIM), an affiliate of the Sponsor, purchased the initial 100,000 Seed Baskets for $2,500,000 and sold them for cash shortly after the Trust commenced trading.
• JSCT, LLC, an approved Ether Trading Counterparty, is an affiliate of Jane Street Capital, LLC, which is an Authorized Participant to the Trust.
• Coinbase, Inc. serves as the Prime Execution Agent and is an affiliate of Coinbase Custody Trust Company, LLC, the Ether Custodian.
• Coinbase Credit, Inc. serves as the Trade Credit Lender and is an affiliate of the Prime Execution Agent and Ether Custodian.
• The Sponsor and its affiliates may have conflicts of interest due to allocating resources among different clients and potential future business ventures, and may take proprietary positions in ether or related derivatives.

Stakeholder Impact

• Shareholders are directly impacted by the volatility of ether's price, which led to an 11.19% decrease in the Trust's NAV per share in 2025, and face potential tax liabilities from forks or airdrops.
• Authorized Participants' ability to maintain market liquidity for the Shares is affected by their capacity to hedge ether exposure and the potential for suspension or rejection of creation/redemption orders.
• Service providers, including the Ether Custodian and Prime Execution Agent, face operational risks and regulatory scrutiny, with their limited liability potentially exposing the Trust and its Shareholders to losses not covered by insurance.
• The Ethereum network community is influenced by ongoing protocol upgrades (e.g., Dencun, Pectra) and governance decisions, which can affect the network's utility, security, and the demand for ether.
• Regulators are actively shaping the digital asset landscape, with evolving frameworks and enforcement actions impacting compliance requirements and market stability for the Trust and the broader crypto industry.
• The Trust's passive management strategy means it does not actively mitigate risks from ether price fluctuations, placing the full impact of market movements on Shareholders.

Next Steps

• Ethereum network's Pectra update expected in 2025 to boost security and functionality of Ethereum wallets.
• U.S. House of Representatives passed Fit21, advancing efforts to establish a federal framework for digital assets.
• President Trump's Executive Order 14178 establishes the Presidents Working Group on Digital Asset Markets, tasked with proposing a federal regulatory framework within 180 days.
• Indian government proposed new legislation aimed at clamping down on unregulated lending, including activities through digital platforms, starting in the second half of 2025.
• South Korea announced plans to regulate cross-border virtual asset transactions, including cryptocurrencies, starting in the second half of 2025.
• The SEC's appeal of the Ripple case decision, with a brief submitted by January 15, 2025, and Commissioners deliberating on February 20, 2025.

Key Dates

Recommendation

The Trust's performance is directly tied to the price of ether, which experienced a significant decline in 2025, leading to a substantial decrease in net assets and NAV per share. While the ETF structure appears sound and regulatory clarity is improving for spot crypto products, the inherent volatility and speculative nature of ether itself warrant a cautious 'hold' recommendation. Investors already holding should monitor market conditions and regulatory developments, while new investors should consider the high-risk profile of the underlying asset before making an investment decision.

Keywords

Ethereum ETF, ETHW, Ether, Cryptocurrency, Digital Asset, SEC Filing, 10-K, Bitwise, Coinbase, Financial Report, Investment Trust, Proof-of-Stake, DeFi, Blockchain, Market Volatility, Regulatory Risk, Custody, Net Asset Value, NAV