Osprey Funds to Transform Osprey Bitcoin Trust into ETF After Bitwise Acquisition Agreement Ends

Osprey Funds, a fund management firm located in Fairfield, Connecticut, has declared its plan to convert the Osprey Bitcoin Trust (OBTC) into a spot Bitcoin exchange-traded fund (ETF).

This decision comes after the cancellation of an agreement for Bitwise Asset Management to acquire the assets of OBTC.

In a statement on January 14, Osprey announced its intention to submit a Form S-1 registration statement to 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 conveyed optimism regarding the submission of the form by the end of January.

“We’re dedicated to transitioning our investors into a Bitcoin ETF. This appears to be the most certain path at this moment,” King stated.

OBTC, which was launched in February 2021, was initially designed to compete with the Grayscale Bitcoin Trust (GBTC).

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

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

Part 2 $OBTChttps://t.co/rCgBotZO06 https://t.co/Nl69tyZen9

— Greg King, CFA (@GregoryDKing) January 14, 2025

The decision to seek an ETF conversion follows the failure of a proposed acquisition by Bitwise.

The deal, announced in August 2024, included a termination clause after December 31, 2024, if regulatory approvals were not obtained.

Osprey’s announcement occurs amid increasing activity in the ETF market, with the SEC recently approving Bitcoin and Ether ETFs from Hashdex and Franklin Templeton.

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

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

However, the firm has encountered challenges in the highly competitive crypto asset market.

In January 2023, Osprey initiated a lawsuit against Grayscale, alleging misleading advertising and anti-competitive practices that enabled Grayscale to dominate the Bitcoin OTC trust market. This lawsuit is still pending.

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

Despite these challenges, the firm appears determined to position OBTC as a spot Bitcoin ETF, a strategy aimed at leveraging 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 an impressive $35.66 billion in net inflows in 2024, significantly surpassing initial industry expectations.

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

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

These figures greatly exceeded Galaxy Digital’s initial $14 billion first-year forecast.

However, Bitcoin ETFs experienced a slight decline toward the end of the year, with $1.33 billion in outflows since December 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) surpassed $400 million.

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