Osprey Funds to Convert Osprey Bitcoin Trust to ETF Following Bitwise Acquisition Deal Termination

Osprey Funds, an investment management firm based in Fairfield, Connecticut, has announced its intention to convert the Osprey Bitcoin Trust (OBTC) into a spot Bitcoin exchange-traded fund (ETF).

The decision follows the termination of a deal for Bitwise Asset Management to acquire OBTC’s assets.

In a statement on January 14 , Osprey revealed plans to file a Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) “as soon as practicable.”

Osprey CEO Optimistic About Filing for Bitcoin ETF Conversion

Osprey’s CEO Greg King expressed optimism about filing the form by the end of January.

“We are committed to getting our investors into a Bitcoin ETF. This seems like the surest path at this point,” King stated.

OBTC, launched in February 2021, was initially positioned as a competitor to the Grayscale Bitcoin Trust (GBTC).

The fund tracks Bitcoin’s price without directly holding the cryptocurrency and currently manages $181 million in assets.

While OBTC has seen a 151% price increase over the past year, it remains below its $50 all-time high reached at launch.

The decision to pursue an ETF conversion follows the collapse of a proposed acquisition by Bitwise.

The deal, announced in August 2024, allowed for termination after December 31, 2024, if regulatory approvals were not secured.

Osprey’s announcement comes amid growing momentum in the ETF market, with the SEC recently approving Bitcoin and Ether ETFs from Hashdex and Franklin Templeton.

Currently, 32 Bitcoin ETFs trade in the U.S., though only 11 are spot Bitcoin ETFs, according to VettaFi.

Osprey’s OBTC closed its last trading session with a 3% increase, reaching $29.84.

The firm, however, has faced challenges in the highly competitive crypto asset market.

In January 2023, Osprey filed a lawsuit against Grayscale, alleging misleading advertising and anti-competitive practices that allowed Grayscale to dominate the Bitcoin OTC trust market. This lawsuit remains unresolved.

Osprey also explored options to sell or liquidate OBTC in March 2024, citing the fund’s units trading at a discount to Bitcoin’s value.

Despite these hurdles, the firm appears determined to position OBTC as a spot Bitcoin ETF, a move aimed at capitalizing on the growing demand for regulated Bitcoin investment products.

US Spot Bitcoin ETFs See Over $35B in Inflows in 2024

As reported, spot Bitcoin ETFs in the United States recorded a remarkable $35.66 billion in net inflows in 2024, significantly exceeding early industry projections.

BlackRock’s iShares Bitcoin Trust ETF (IBIT) led the market with $37.31 billion in inflows, followed by Fidelity’s Wise Origin Bitcoin Fund (FBTC) with $11.84 billion, and ARK’s 21Shares Bitcoin ETF (ARKB) with $2.49 billion.

Other significant contributors included the Bitwise Bitcoin ETF (BITB), which reported $2.19 billion in inflows.

These figures far surpassed Galaxy Digital’s initial $14 billion first-year estimate.

However, Bitcoin ETFs faced a slight downturn toward the year’s end, with $1.33 billion in outflows since Dec. 19.

On the Ether ETF front, BlackRock’s iShares Ethereum Trust ETF (ETHA) and Fidelity Ethereum Fund (FETH) led inflows with $3.52 billion and $1.56 billion, respectively.

Grayscale’s low-fee Ethereum Mini Trust ETF (ETH) secured $608.1 million in inflows, while the Bitwise Ethereum ETF (ETHW) crossed $400 million.