Fund Slashes Ether ETF Position by $16 Million as World's Second-Largest Cryptocurrency Piles On Losses

Pilgrim Partners Asia disclosed in a February 2 SEC filing that it sold 620,000 shares of the iShares Ethereum Trust ETF (NASDAQ:ETHA), an estimated $16.21 million trade based on quarterly average pricing.

What happened

According to its SEC filing dated February 2, Pilgrim Partners Asia Pte Ltd reduced its position in the iShares Ethereum Trust ETF (NASDAQ:ETHA), selling 620,000 shares during the fourth quarter. The estimated value of shares sold was $16.21 million, calculated using the average closing price for the period. Meanwhile, the quarter-end value of the ETHA position dropped by $19.63 million, reflecting both share sales and price changes.

What else to know

Pilgrim Partners Asia Pte Ltd’s ETHA stake decreased to 0.11% of 13F reportable AUM after the sale.

Top holdings after the filing:

• NASDAQ: QQQ: $40.67 million (19.6% of AUM)
• NASDAQ: IBIT: $25.49 million (12.3% of AUM)
• NYSEMKT: SPY: $25.40 million (12.2% of AUM)
• NYSEMKT: VOO: $18.72 million (9.0% of AUM)
• NASDAQ: MSTR: $10.64 million (5.1% of AUM)

As of February 2, ETHA shares were priced at $17.50, down 14.8% over the past year and vastly underperforming the S&P 500’s roughly 15% gain in the same period.

ETF overview

ETF snapshot

• Investment strategy: The ETF seeks to provide investors with exposure to the price performance of ether (ETH) by holding ether directly, aiming to track the value of the underlying digital asset without requiring direct ownership or management of cryptocurrency by investors.
• Underlying holdings: The fund's portfolio consists primarily of ether, offering a single-asset structure designed to closely mirror the spot price of ETH, with minimal diversification beyond the underlying digital asset.
• Expense ratio and structure: The ETF operates as a grantor trust, with an expense structure typical of digital asset funds; detailed expense ratio information is not provided in the available data.

The iShares Ethereum Trust ETF offers institutional and retail investors a regulated vehicle for gaining exposure to ether, the native token of the Ethereum blockchain, without the operational complexities of direct crypto custody or trading. The fund's scale positions it as a significant player in the digital asset ETF segment, providing liquidity and accessibility for investors seeking to participate in the ether market through traditional brokerage accounts. Its structure eliminates the need for direct interaction with digital asset platforms, appealing to those prioritizing operational simplicity and regulatory oversight.

What this transaction means for investors

For long-term investors, this move is less about calling the top in crypto and more about discipline around position sizing in a portfolio built around liquid, index-heavy exposure. Pilgrim Partners Asia’s filing shows the Ethereum ETF exposure shrinking to just 0.11% of reportable AUM, a rounding error next to core allocations like QQQ, SPY, and VOO.

Ether prices have been violently cyclical since launch in 2017. They nearly tripled between April and September last year before collapsing roughly 50%, including a steep sell-off in the past week amid broader market stress. ETHA reflects that volatility clearly, down about 15% over the past year with a one-day NAV drop near 14% in early February. The fund’s structure is clean and transparent, holding ether directly with a 0.25% sponsor fee, but it offers no income, no diversification, and no volatility buffer.

Seen through that lens, the sale looks like risk control, not a repudiation of digital assets, especially since Pilgrim still holds exposure to other high-volatility assets like MicroStrategy. Ultimately, speculative assets can coexist in a portfolio, but only when size, timing, and downside tolerance are tightly managed.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.