Fri, May 2, 8:06 PM (16 days ago)
**Grayscale Ethereum Classic Trust (ETC) (ETCG) Q1 2025 Financial Summary** Grayscale Ethereum Classic Trust (ETC) reported a challenging first quarter of 2025, marked by significant volatility in the Ethereum Classic (ETC) market. The trust's net assets decreased by 33% to $188.5 million, primarily due to a substantial decline in the value of ETC. The net realized and unrealized loss on investment in ETC was $93.0 million, driven by a drop in ETC's price from $25.13 to $16.84 per ETC. **Key Financial Metrics:** - **Revenue:** No investment income was reported. - **Expenses:** Sponsor’s fee amounted to $1.5 million. - **Net Investment Loss:** $1.5 million. - **Net Realized and Unrealized Loss:** $93.0 million. - **Net Decrease in Net Assets:** $94.5 million. **Performance Metrics:** - **Principal Market NAV per Share:** Decreased from $20.23 to $13.47. - **Total Return:** -33.42% for the quarter. - **Ratios to Average Net Assets:** Net investment loss and expenses were both 2.50%. **Cash Flow and Liquidity:** - The trust has not had a cash balance since inception. - The sponsor covers most expenses, minimizing the trust's cash holdings. **Trends and Uncertainties:** - **Market Volatility:** ETC prices have been highly volatile, impacting the trust's net asset value. - **Regulatory Uncertainty:** The SEC's stance on digital assets remains unclear, posing potential risks. - **Operational Risks:** Dependence on third-party service providers and the trust's passive investment strategy. **Future Operations Impact:** - The trust will continue to hold ETC and issue shares in exchange for ETC deposits. - The sponsor will cover most expenses, maintaining the trust's passive investment approach. - The trust may face challenges if ETC is classified as a security, potentially requiring registration under the Investment Company Act of 1940. **Legal and Risk Factors:** - The trust is involved in legal proceedings related to marketing practices. - Risks include market volatility, regulatory uncertainty, and operational dependencies. **Conclusion:** Grayscale Ethereum Classic Trust faced significant headwinds in Q1 2025 due to ETC price volatility. The trust's passive investment strategy and reliance on the sponsor for expense coverage will continue, but regulatory and market risks remain. Investors should monitor these factors closely.