Bitwise Bitcoin ETF to absorb $120M Osprey Bitcoin Trust

The Bitwise Bitcoin ETF (BITB) will soon be getting $120 million in Bitcoin after a plan to acquire the assets in the Osprey Bitcoin Trust (OBTC).

The deal, revealed in an Aug. 27 joint statement between Bitwise Asset Management and Osprey Funds, has seen the two enter into an Asset Purchase Agreement. 

Part of the transaction will see OBTC unitholders receive shares of BITB as they liquidate their shares of OBTC. Subject to closing conditions, it is expected to close “later this year.” 

Osprey Funds, based in Fairfield, Connecticut, began trading its OBTC on the OTC market in February 2021 and has been available to United States investors with a management fee of 0.49%.

The year-to-date unit price of the Osprey Bitcoin Trust (OBTC) Source: Yahoo Finance

At the time, it was a competitor to the much larger Grayscale Bitcoin Trust before GBTC eventually converted to a spot Bitcoin ETF. 

Osprey even sued Grayscale in January 2023, claiming that Grayscale’s misleading advertising and promotion allowed it to take a monopoly share in a “two-participant market.”

By March, Osprey said it had begun considering a potential sale or liquidation after it found that units in the trust were trading at a discount to the value of Bitcoin. 

“We wanted a solution that worked for all and this seems to be the best option,” Osprey Funds founder and CEO Greg King wrote in an Aug. 27 X post. OBTC’s website shows its asset under management is around $120.7 million at the time of writing.

Longer-term investors in OBTC may have noticed that the trust’s three-year return is currently around 9.5%, while Bitcoin has been 23.5% over the same timeframe, according to data from Barchart and Yahoo Finance . 

“This announcement follows Osprey’s prior communication regarding its exploration of strategic alternatives,” Osprey and Bitwise wrote in a statement. 

“The acquisition by Bitwise represents a significant step in that process, offering OBTC unitholders the opportunity to benefit from the scale and expertise of Bitwise.”

Related: Bitwise exec says, ‘We’re not bullish enough,’ amid political sway to crypto

YCharts data shows OBTC’s discount to Bitcoin has hovered around 3% to 5% over the last month. Bitwise’s BITB has been trading much closer to Bitcoin with a discount or premium to NAV close to 0%.

Bitwise’s BITB discount to NAV. Source: YCharts

Since its launch seven months ago, Bitwise has seen $2 billion worth of investor funds inflow into its spot Bitcoin ETF . It charges a much lower management fee of 0.20%.

However, its performance has still paled in comparison to BlackRock’s iShares Bitcoin Trust (IBIT), which has attracted nearly $21 billion in investor funds since January. 

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