Bitwise to Expand with $120M Osprey Bitcoin Trust Acquisition
On August 27, Bitwise Asset Management and Osprey Funds jointly announced a major transaction in the cryptocurrency investment sector. Under the terms of an Asset Purchase Agreement, Bitwise’s Bitcoin ETF (BITB) will acquire the assets of the Osprey Bitcoin Trust (OBTC). This move is expected to enhance BITB’s assets under management by approximately $120 million, marking a significant expansion for Bitwise.
Transaction Details
The agreement stipulates that Osprey Bitcoin Trust unitholders will receive shares of BITB in a liquidating distribution of OBTC. This transition aims to provide a seamless shift for OBTC investors, offering them equivalent bitcoin exposure through BITB. Importantly, for current BITB holders, there will be no alterations to their shares or the operational structure of the fund.
The transaction is anticipated to be tax-free for OBTC unitholders concerning U.S. federal income tax, pending customary closing conditions. It is expected to be completed later this year. Bitwise and Osprey will provide further updates through filings with the Securities and Exchange Commission (SEC).
Strategic Moves and Market Impact
This acquisition follows Osprey’s exploration of strategic alternatives to boost unitholder value, including the potential sale or merger of the Trust. “We wanted a solution that worked for all and this seems to be the best option,” said Greg King, Osprey Funds’ CEO. The merger aligns with Osprey’s previous considerations due to OBTC’s trading at a discount relative to Bitcoin’s value.
The Osprey Bitcoin Trust, which began trading on the OTC market in February 2021, faced challenges in competing with larger players like Grayscale. With a management fee of 0.49%, OBTC’s performance lagged behind Bitcoin’s returns. In contrast, the Bitwise Bitcoin ETF, launched in January, charges a lower fee of 0.20% and has enjoyed significant investor inflows, accumulating $2 billion in assets since its inception.
Future Outlook
The acquisition marks another step in Bitwise’s growth strategy. With BITB now set to absorb the $120 million in assets from OBTC, Bitwise continues to strengthen its position in the competitive Bitcoin ETF market. This expansion not only broadens its asset base but also enhances the scale and expertise available to its investors.
In addition, Bitwise recently acquired ETC Group, further diversifying its product offerings and expanding its presence in the European market. Following these moves, Bitwise’s total assets under management have surged to $4.5 billion.
Conclusion
The acquisition of the Osprey Bitcoin Trust by Bitwise represents a strategic consolidation in the cryptocurrency investment market. By integrating OBTC’s assets, Bitwise enhances its market presence and provides OBTC unitholders with improved investment conditions. Investors can expect more detailed information as the transaction progresses and will benefit from the increased scale and efficiency of Bitwise’s offerings.
