BlackRock reverse split may make ETH trading 70x cheaper

BlackRock will combine every three shares of its iShares Ethereum Trust (ETHA) into one on Oct. 6, following an approval recorded in a July 31 SEC filing. The fund will record shareholders on Oct. 5 and begin split-adjusted trading on Nasdaq on Oct. 6. The consolidation will reduce outstanding shares from about 384 million to roughly 128 million while leaving the dollar value of investors’ holdings unchanged; for example, a holder of 300 shares would receive 100 shares worth the same amount if Ether’s market price remains stable.

The reverse split will raise ETHA’s nominal per-share price from about $14.15 to roughly $42. After the change, the fund’s share price will sit above several rival spot-Ethereum funds even though the ETF’s net asset total remains near $5.4 billion. The fund’s economic exposure to Ether and its year-to-date loss will not change as a result of the split.

BlackRock’s prospectus gives the sponsor authority to consolidate shares when it determines the secondary-market price has moved outside a desirable trading range. The company did not provide additional explanation in the filing.

Market quotes show a one-cent bid-ask quote represents about 0.071% of a $14.15 share today, or roughly seven basis points. If market makers continue to quote the fund in one-cent increments after the split, that same one-cent quote would equal about 0.024% of a $42 share, or roughly two basis points. ETF analyst Eric Balchunas projects the fund’s quoted spread could fall from about seven basis points to roughly two following the consolidation.

Lower quoted spreads would reduce the percentage cost of small retail executions routed through the ETF. Some simplified crypto purchase services charge retail investors in the low hundreds of basis points to convert dollars into crypto. Using the example spreads above, a two-basis-point ETF execution compared with a 140-basis-point simplified purchase would be about 70 times cheaper by percentage. Fees and spreads on crypto platforms vary by exchange, payment method, order size and customer tier.

ETFs and direct crypto purchases serve different needs. ETF shares trade inside brokerage accounts and carry an annual sponsor fee. Direct purchases allow buyers to withdraw tokens, use self-custody, or move assets on-chain.

Market participants will monitor quoted spreads after Oct. 6 and whether the split affects retail order flow between brokerage ETFs and direct crypto on-ramps. The split is a structural change to the ETF’s share profile and does not change its underlying exposure to Ether.