Osprey Funds has announced plans to convert its Osprey Bitcoin Trust (OBTC) into an exchange-traded fund (ETF), following the termination of a deal for Bitwise Asset Management to acquire the trust. The firm intends to file a Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) “as soon as practicable,” signaling its intention to join the growing Bitcoin ETF market.
The announcement came after Bitwise’s planned acquisition of OBTC, announced in August 2024, was scrapped due to a failure to secure necessary regulatory approvals by the December 31 deadline.
Competition in the Bitcoin ETF Market
Osprey’s OBTC, which launched in February 2021, was once a rival to the Grayscale Bitcoin Trust (GBTC). However, Grayscale successfully converted its trust into a spot Bitcoin ETF in January 2024, leaving OBTC lagging behind. Currently, OBTC tracks Bitcoin’s price without holding the underlying asset and manages $181 million in assets under management (AUM).
The SEC has recently approved other Bitcoin-related ETFs, including offerings from Hashdex and Franklin Templeton, contributing to the rapid growth of the Bitcoin ETF market. According to VettaFi, the U.S. now hosts 32 Bitcoin ETFs, though only 11 of these are spot Bitcoin ETFs.
OBTC’s Market Performance
OBTC units have seen significant gains over the past year, rising over 151% to $29.84 in the most recent trading session, according to Google Finance. However, this remains below its all-time high of $50, achieved shortly after the trust began trading on the OTC market in February 2021.
Despite the gains, Osprey has faced challenges with OBTC, including a trading discount to the value of Bitcoin. This prompted the firm to consider liquidation or a potential sale of the trust in March 2024.
Osprey is also engaged in an ongoing lawsuit against Grayscale, alleging that the company’s advertising and promotional practices misled investors into believing its Bitcoin trust would become an ETF, allowing Grayscale to dominate the Bitcoin OTC trust market.
