10-Q: Hashdex Nasdaq Crypto Index US ETF Reports Q1 2025 Results: NAV Impacted by Crypto Market Downturn

Hashdex Nasdaq Crypto Index US ETF reports its first quarter results for 2025, with the fund's net asset value (NAV) significantly affected by declines in the prices of Bitcoin and Ether.

Summary

• Hashdex Nasdaq Crypto Index US ETF reported its financial results for the period from January 21, 2025, to March 31, 2025.
• The Trust's investment objective is to mirror the daily changes in the Nasdaq Crypto US Settlement Price Index (NCIUSS).
• As of March 31, 2025, the Trust's net assets totaled $88,730,642.
• The NAV per share decreased from $25.00 at inception to $20.88 as of March 31, 2025.
• This decrease is attributed to declines in the prices of Bitcoin and Ether, which decreased by 14.19% and 31.00% respectively, during the period from February 13, 2025 to March 31, 2025.
• The Trust experienced a net decrease in net assets resulting from operations of $3,953,064, primarily due to unrealized losses on investments in Bitcoin and Ether.
• The Trust's management fee is 0.50% per annum, but the sponsor has temporarily reduced it to 0.25% per annum through December 31, 2025.
• As of March 31, 2025, there were 4,250,000 shares outstanding.
• The Trust operates as a single operating segment with investments primarily in Bitcoin and Ether.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative due to the decrease in NAV and net assets resulting from operations, which were primarily driven by the decline in Bitcoin and Ether prices. However, the temporary reduction in the management fee is a positive factor.

Positives

• The Sponsor has temporarily reduced the management fee to 0.25% per annum through December 31, 2025, which lowers the cost for investors during this period.
• The Trust's disclosure controls and procedures were deemed effective as of the end of the reporting period.
• The Trust is designed to provide investors with exposure to crypto assets, specifically Bitcoin and Ether, through a regulated investment vehicle.

Negatives

• The Trust experienced a significant decrease in NAV due to the decline in the prices of Bitcoin and Ether.
• The Trust reported a net decrease in net assets resulting from operations of $3,953,064 for the period.
• The Trust is subject to concentration risk as substantially all of its assets are holdings of Bitcoin and Ether.

Risks

• The Trust is subject to the risks associated with investing in crypto assets, including price volatility and regulatory uncertainty.
• A decline in the price of Bitcoin and Ether will have an adverse effect on the value of the Shares of the Trust.
• The Trust is subject to concentration risk as substantially all of its assets are holdings of Bitcoin and Ether.
• Changes to the Index Rules may result in adverse effects to the Trust and/or in the ability of the Sponsor to implement the Trusts investment strategy.
• The Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required to indemnify the Trusts service providers under certain circumstances.

Future Outlook

The Trust's investment objective is to track the daily changes in the Nasdaq Crypto US Settlement Price Index (NCIUSS), and the Sponsor will employ a passive investment strategy to achieve this objective.

Industry Context

The Hashdex Nasdaq Crypto Index US ETF operates within the emerging market of crypto asset investment products, providing investors with a regulated means to gain exposure to Bitcoin and Ether. The performance of the ETF is directly tied to the performance of these underlying crypto assets, making it susceptible to the volatility inherent in the crypto market.

Comparison to Industry Standards

• The Hashdex Nasdaq Crypto Index US ETF is similar to other crypto ETFs that track the performance of Bitcoin and Ether.
• Comparable ETFs include those offered by Grayscale, ProShares, and Valkyrie.
• The management fee of 0.50% (temporarily reduced to 0.25%) is within the range of fees charged by other crypto ETFs.
• The ETF's performance is benchmarked against the Nasdaq Crypto US Settlement Price Index (NCIUSS), which is designed to measure the performance of a material portion of the overall crypto asset market.
• The ETF's holdings are limited to Bitcoin and Ether, which is a common strategy for crypto ETFs seeking to provide exposure to the two largest crypto assets by market capitalization.

Related Party Transactions

• The Sponsor is considered a related party to the Trust.
• The Sponsor provided the initial capital of $250,000 for the initial sale of 10,000 shares to the Sponsor.
• The Trust has a liability to the Sponsor of $11,629 for the February and March Management Fee.
• The Hashdex Nasdaq Crypto Index Fund (NCI), a Fund managed by the Sponsor, holds 4,000,000 shares.

Stakeholder Impact

• Shareholders are impacted by the decrease in NAV due to the decline in Bitcoin and Ether prices.
• Shareholders benefit from the temporary reduction in the management fee.
• Authorized Participants are impacted by the creation and redemption of shares in baskets of 10,000 shares.

Next Steps

• The Trust will continue to track the Nasdaq Crypto US Settlement Price Index (NCIUSS) and rebalance its portfolio quarterly.
• The SEC will review the proposed rule change to adopt new Nasdaq Rule 5712, with a deadline of June 5, 2025.
• The Sponsor will continue to manage the Trust's operations and monitor its performance.

Key Dates

Keywords

Hashdex, Nasdaq Crypto Index US ETF, Bitcoin, Ether, ETF, Crypto, NCIQ, NAV, Management Fee, Digital Assets