Bitwise to Acquire Osprey’s Bitcoin Assets in $120 Million Deal

Bitwise Asset Management is set to acquire $120 million in Bitcoin assets through a deal with Osprey Funds.

This agreement will result in the transfer of assets from the Osprey Bitcoin Trust (OBTC) to Bitwise’s Bitcoin ETF (BITB).

Transaction Details

Under the agreement, OBTC unitholders will receive BITB shares as they liquidate their OBTC holdings. The deal is expected to close later this year, pending final conditions.

related reading：Bitwise Expands into Europe with ETC Group Acquisition

Osprey’s Market Position

Osprey Funds, based in Connecticut, launched OBTC in February 2021. It was initially a competitor to Grayscale Bitcoin Trust, which eventually converted to a spot Bitcoin ETF.

Osprey’s market presence faced challenges, leading to a lawsuit against Grayscale in early 2023. The suit claimed Grayscale monopolised the market through misleading advertising.

Strategic Shift for Osprey

By March, Osprey considered selling or liquidating OBTC due to the trust's units trading below Bitcoin's value. Greg King, Osprey’s CEO, expressed that the acquisition by Bitwise is a favourable solution for all parties involved.

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

Market Impact

OBTC’s assets under management stand at approximately $120.7 million. The trust’s three-year return has been 9.5%, significantly lower than Bitcoin’s 23.5% during the same period.

Additionally, OBTC has traded at a 3% to 5% discount to Bitcoin over the past month, while Bitwise’s BITB has traded closer to Bitcoin’s value with minimal deviation.

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

Bitwise’s Competitive Landscape

Bitwise’s Bitcoin ETF has attracted $2 billion in investor funds since its launch, benefiting from a lower management fee of 0.20%.

However, it still lags behind BlackRock’s iShares Bitcoin Trust, which has amassed $21 billion in investor funds since January.