Bitwise Bitcoin ETF to acquire $120M in Bitcoin from OBTC

Bitwise Asset Management’s Bitcoin ETF (BITB) is set to absorb $120 million worth of Bitcoin as part of a deal with Osprey Funds.

The agreement, announced on August 27, involves an Asset Purchase Agreement where Bitwise will acquire the assets of the Osprey Bitcoin Trust (OBTC).

As part of the transaction, OBTC unitholders will exchange their shares for shares of BITB, with the deal expected to close "later this year," pending closing conditions.

Osprey Funds, based in Fairfield, Connecticut, launched its OBTC on the OTC market in February 2021, offering U.S. investors a low management fee of 0.49%.

Initially, OBTC was a competitor to Grayscale Bitcoin Trust (GBTC), but Grayscale eventually converted to a spot Bitcoin ETF, overshadowing OBTC.

In January 2023, Osprey filed a lawsuit against Grayscale, alleging that misleading advertising gave Grayscale a monopoly in what was essentially a two-participant market.

By March 2023, Osprey began exploring a potential sale or liquidation of OBTC after its units started trading at a discount to the value of Bitcoin.

Osprey Funds founder and CEO Greg King expressed that the acquisition by Bitwise was the best option for all parties involved, noting this in an August 27 post on X (formerly Twitter).

OBTC’s assets under management were around $120.7 million at the time of the announcement, with a three-year return of approximately 9.5%, compared to Bitcoin’s 23.5% over the same period.

The acquisition by Bitwise is part of Osprey’s broader strategic exploration, offering OBTC unitholders the benefits of Bitwise's scale and expertise.

Data from YCharts indicates that OBTC’s discount to Bitcoin has ranged between 3% and 5% over the past month, while Bitwise’s BITB has maintained a closer alignment to Bitcoin’s net asset value (NAV), with minimal discount or premium.

Since its launch seven months ago, Bitwise has attracted $2 billion in investor funds into its spot Bitcoin ETF, which features a lower management fee of 0.20%.

Despite this growth, Bitwise’s ETF performance has lagged behind BlackRock’s iShares Bitcoin Trust (IBIT), which has amassed nearly $21 billion in investor funds since January.