Highlights:
- Bitwise ETF to acquire Osprey Bitcoin Trust’s $120 million in assets, offering a seamless transition for unitholders.
- The deal will provide OBTC investors with lower fees and better price tracking through Bitwise’s established Bitcoin ETF.
- Bitwise strengthens its position in the competitive Bitcoin ETF market, expanding its reach and assets under management.
Bitwise Asset Management announced its plan to acquire the assets of the Osprey Bitcoin Trust (OBTC), a transaction poised to significantly impact the competitive landscape of Bitcoin exchange-traded funds (ETFs). The deal, disclosed on August 27 in a joint statement, outlines that OBTC unitholders will receive shares of the Bitwise Bitcoin ETF (BITB) as part of a liquidating distribution. The acquisition is expected to close later this year, pending standard closing conditions.
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#Bitwise #Bitcoin #ETF (#BITB) is set to acquire $120 million in Bitcoin from the #Osprey Bitcoin #Trust (#OBTC) as part of an Asset Purchase Agreement.
OBTC unitholders will receive BITB shares in exchange, with the transaction expected to close later this year.
This move… pic.twitter.com/zqI03AMrAx
— TOBTC (@_TOBTC) August 28, 2024
Osprey Funds, the sponsor of the OBTC, has faced challenges since its launch in February 2021. It was initially positioned as a competitor to the Grayscale Bitcoin Trust but later sought a strategic exit due to OBTC’s shares trading below the value of its Bitcoin holdings. By March, Osprey had considered a sale or merger and had now opted for Bitwise’s acquisition. This will offer its unitholders a more secure transition to BITB.
A Strategic Move to Strengthen Bitwise
The acquisition, when finalized, will bring over $120 million worth of Bitcoin into the Bitwise fund. It will also grant OBTC unitholders exposure to Bitcoin through BITB, known for its lower management fee of 0.20% compared to OBTC’s 0.49%. This transition is expected to be tax-free for OBTC unitholders under U.S. federal income tax laws, providing a seamless shift for investors. “We wanted a solution that worked for all, and this seems to be the best option,” wrote Greg King, Osprey Funds founder and CEO, in an August 27 post on X.
I appreciate that. We wanted a solution that worked for all and this seems to be the best option. 🙏🏻
— Greg King, CFA (@GregKingOsprey) August 27, 2024
This acquisition also offers OBTC unitholders the potential benefits of enhanced scale and expertise that Bitwise brings. Since its launch seven months ago, Bitwise’s spot Bitcoin ETF has attracted around $2 billion in investor funds. Despite facing stiff competition from industry giants like BlackRock and Fidelity, Bitwise has maintained its position as a strong contender. Further reinforced by its recent acquisition of the London-based ETC Group, which added $2.5 billion to its assets under management.
Integration and Market Implications
The move marks a significant step for Bitwise as it seeks to expand its footprint in the Bitcoin ETF market. In the past month, OBTC shares fell 4.27%, while Bitcoin’s price dropped by 9.34%. Meanwhile, BITB shares fell by 8.56%, aligning closely with Bitcoin’s value. The consolidation under Bitwise will likely offer OBTC unitholders more accurate tracking of Bitcoin’s price and reduced management fees.
The deal is part of Bitwise’s strategic expansion into new markets and solidifies its position in the fast-evolving Bitcoin ETF sector. Current BITB shareholders will see no changes to their shares or the fund’s operations. The acquisition, expected to close later this year, aligns with Bitwise’s goal to enhance its scale and market influence, offering a streamlined solution to OBTC unitholders.
Osprey and Bitwise emphasized in their joint statement that the transaction represents a critical step forward in Osprey’s strategy to explore alternatives for its trust, ultimately providing greater value and potential returns for its investors. In future filings with the U.S. Securities and Exchange Commission, additional details will be provided.
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