Bitwise Asset Management is set to acquire $120 million in Bitcoin as it purchases assets from Osprey Bitcoin Trust (OBTC). The agreement, disclosed on August 27, allows OBTC holders to receive shares in Bitwise’s Bitcoin ETF fund (BITB). This acquisition marks a significant development in the sector.
Notable Development in the ETF Sector
Connecticut-based Osprey Funds started trading OBTC on the OTC market in February 2021. With a 0.49% management fee, it was marketed to U.S. investors and positioned as a competitor to the Grayscale Bitcoin Trust, which aimed to become a spot Bitcoin ETF. In January 2023, Osprey filed a lawsuit against Grayscale, accusing it of misleading advertisements and monopolistic practices. By March, Osprey considered a sale or liquidation due to OBTC units trading below Bitcoin’s value.
Currently, OBTC manages approximately $120.7 million in assets. Data from Barchart and Yahoo Finance show that OBTC’s three-year return is around 9.5%, while Bitcoin’s return over the same period is 23.5%. Osprey and Bitwise highlighted the strategic benefits of this acquisition for OBTC unit holders, emphasizing Bitwise’s scale and expertise.
Details on the Matter
YCharts data reveals that OBTC’s discount rate compared to Bitcoin has been between 3% and 5% over the past month. Bitwise’s BITB, on the other hand, trades almost at par with Bitcoin, with minimal discount or premium relative to its net asset value (NAV). Launched seven months ago, Bitwise’s spot Bitcoin ETF has attracted $2 billion in investor funds and charges a lower management fee of 0.20%. Despite this, its performance is still overshadowed by BlackRock’s iShares Bitcoin Trust (IBIT), which has garnered around $21 billion since January.
Key Takeaways for Investors
This acquisition provides several important inferences for investors:
- OBTC unit holders will transition to BITB shares, potentially benefiting from Bitwise’s expertise.
- Bitwise’s lower management fee of 0.20% offers cost advantages compared to OBTC’s 0.49% fee.
- BITB’s close trading to Bitcoin’s NAV may offer more stable investment compared to OBTC’s discount rate.
As a result, this move by Bitwise is seen as a strategic expansion in the Bitcoin ETF market, potentially offering improved investment conditions for former OBTC holders.
