Bitwise Expands Bitcoin ETF Holdings with Osprey Trust Acquisition

TLDR:

• Bitwise Bitcoin ETF (BITB) is acquiring Osprey Bitcoin Trust (OBTC), worth $120 million in assets
• OBTC unitholders will receive BITB shares as part of a liquidating distribution
• The acquisition is expected to close later this year, subject to conditions
• BITB offers a lower management fee (0.2%) compared to OBTC (0.49%)
• Bitwise recently acquired ETC Group, expanding into the European market

Bitwise Asset Management, the operator of the Bitwise Bitcoin ETF (BITB), has announced its acquisition of the Osprey Bitcoin Trust (OBTC), a move that will add approximately $120 million in assets to its holdings.

Under the terms of the Asset Purchase Agreement, OBTC unitholders will receive shares of BITB as part of a liquidating distribution.

This transition is designed to be tax-free for OBTC unitholders for U.S. federal income tax purposes. The acquisition is expected to close later this year, pending customary closing conditions.

The Osprey Bitcoin Trust, which began trading on the OTC market in February 2021, has been operating with a management fee of 0.49%. In contrast, the Bitwise Bitcoin ETF charges a lower fee of 0.20%, offering OBTC investors potential cost savings following the transition.

This acquisition follows Osprey’s earlier communication regarding the exploration of strategic alternatives. In March, Osprey had begun considering a potential sale or liquidation after finding that units in the trust were trading at a discount to the value of Bitcoin.

Greg King, founder and CEO of Osprey Funds, stated,

“We wanted a solution that worked for all and this seems to be the best option.”

The move comes at a time when Bitwise has been experiencing significant growth. Since its launch seven months ago, BITB has attracted $2 billion worth of investor funds. The addition of OBTC’s assets will further boost Bitwise’s assets under management (AUM).

While BITB has seen substantial inflows, it still trails behind industry leader BlackRock’s iShares Bitcoin Trust (IBIT), which has attracted nearly $21 billion in investor funds since January.

The acquisition of OBTC is not Bitwise’s only recent expansion move. Just a week prior, the company announced its acquisition of ETC Group, a London-based firm managing assets worth $1 billion.

This acquisition marks Bitwise’s entry into the European market, where ETC Group offers a range of digital asset exchange-traded products (ETPs) providing European investors exposure to Bitcoin, Ethereum, and Solana.

For current BITB shareholders, the company has assured that there will be no changes to their shares or the operation of the fund as a result of this transaction.

The acquisition is designed to offer OBTC unitholders a seamless transition to equivalently valued exposure to Bitcoin via BITB, with the added benefit of Bitwise’s scale and expertise.