Bitwise Bitcoin ETF Set to Acquire $120 Million from Osprey Bitcoin Trust

Pending the fulfillment of closing conditions, the Bitwise Bitcoin ETF is poised to acquire all Bitcoin held within the Osprey Bitcoin Trust.

Details of the Acquisition

The acquisition plan, announced on August 27 through a joint statement from Bitwise Asset Management and Osprey Funds, involves an Asset Purchase Agreement.

• OBTC unitholders will receive shares of BITB as they liquidate their holdings in OBTC.
• The transaction is expected to finalize later this year, subject to closing conditions.

Overview of Osprey Funds

Osprey Funds, located in Fairfield, Connecticut, launched its Osprey Bitcoin Trust (OBTC) on the OTC market in February 2021. The trust has been accessible to U.S. investors and carries a management fee of 0.49%.

Competitive Landscape

Initially, OBTC was positioned as a competitor to the larger Grayscale Bitcoin Trust (GBTC). While GBTC transitioned to a spot Bitcoin ETF, Osprey faced challenges, including a lawsuit against Grayscale in January 2023 over alleged unfair market practices.

In March, Osprey began to contemplate options for sale or liquidation due to the trust’s units trading below Bitcoin’s actual value.

Commentary from Osprey Funds CEO

CEO Greg King remarked on August 27 that this acquisition represents “the best option” for all parties involved, and noted that OBTC’s assets under management were around $120.7 million at the time.

Performance Metrics

Investors in OBTC may notice it posted a three-year return of approximately 9.5%, compared to Bitcoin’s 23.5% return over the same period, as sourced from Barchart and Yahoo Finance.

Strategic Move by Bitwise

This acquisition is part of Osprey’s exploration of strategic alternatives, and it aims to provide OBTC unitholders with access to Bitwise’s scalability and expertise.

Market Analysis

Recent data shows OBTC’s discount to Bitcoin has fluctuated between 3% to 5%, whereas Bitwise’s BITB has maintained a closer relationship to Bitcoin’s value, with nearly 0% discount or premium to NAV.

Investor Engagement

Since its launch seven months ago, Bitwise’s spot Bitcoin ETF has experienced approximately $2 billion in investor subscriptions, with a much lower management fee of 0.20% compared to its competitors. Despite this, it still trails behind BlackRock’s iShares Bitcoin Trust (IBIT), which has attracted nearly $21 billion in investments since January.