Bitwise Bitcoin ETF Set to Expand Portfolio With Osprey Bitcoin Trust

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Osprey Funds, a closed-end Bitcoin investment firm, is finalizing an Asset Purchase Agreement with Bitwise Asset Management. The deal entails that Bitwise Bitcoin Exchange Trust Fund (ETF) BITB receives $120 million in Bitcoin (BTC) through an agreement to acquire assets from Osprey Bitcoin Trust (OBTC). 

This deal comes as Osprey Fund is on the verge of liquidating its assets due to low returns on its digital investment product. On August 27, the two firms jointly announced this acquisition deal, slated to close later this year, pending closing conditions. As part of the deal, OBTC unit holders will receive BITB shares upon selling their OBTC shares. 

Osprey Funds Fulfill Bitcoin ETF Merger Dream 

Bitwise BITB acquiring all of Osprey’s assets is a relief for the firm. In March, the investment firm decided to pursue a potential sale or merger with a Bitcoin ETF after realizing its trust units were trading below Bitcoin’s value. Data from Barchart and Yahoo Finance even show that investors holding OBTC long-term might have seen a 9.5% return in three years.

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Noteworthy, Bitcoin has increased by 23.5% during that same time. OBTC’s total assets under management stand at about  $120.7 million. 

This low investment return prompted Greg King, Osprey Funds founder and CEO, to seek a solution that would benefit the company and its customers. In an X post, King expressed that this acquisition deal with Bitwise is the optimal choice as it provides a significant opportunity for OBTC unitholders.

Osprey Funds Once Competed With Grayscale

Osprey Funds and Grayscale Bitcoin Trust (GBTC) were once rivals in the digital market. Both offered Bitcoin trusts to investors in the Over-the-Counter Market (OTC) before GBTC switched its investment offerings to a spot Bitcoin ETF. When OBTC was introduced in 2021, it was hailed as the most budget-friendly choice and easy to enter Bitcoin. 

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This was because of its 0.49% management fee offer to investors. The Fairfield-based asset manager launched a Solana (SOL) trust product the same year. In 2023, Osprey took legal action against Grayscale for allegedly publicizing adverts about its Grayscale Bitcoin Trust.

Bitwise Investment Funds Gains Traction

Bitwise’s spot Bitcoin ETF has witnessed a significant $2 billion influx of investor funds within the past seven months. It offers a lower management fee of 0.20%. BITB has been trading in close alignment with Bitcoin, with a discount or premium to NAV hovering around 0%. 

This has recently caused the firm’s Bitcoin and Ethereum ETFs to attract a surge of capital from a large Registered Investment Advisor (RIA). Despite Bitwise’s impressive records in the crypto market, its performance and that of other crypto asset managers has been overshadowed by BlackRock’s iShares Bitcoin Trust (IBIT).

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