Bitwise Asset Management is acquiring $120 million in Bitcoin as part of its plan to absorb the Osprey Bitcoin Trust (OBTC). OBTC holders will exchange their shares for those in Bitwise's Bitcoin ETF. Meanwhile, U.S. spot Bitcoin ETFs saw a reversal in inflows, ending an eight-day positive streak, while BlackRock prepares to launch an Ethereum ETF in Brazil. Additionally, CME Group is set to introduce Bitcoin Friday futures, targeting retail investors with smaller-sized contracts.
Bitwise to Absorb Osprey Bitcoin Trust
Bitwise Asset Management is set to acquire $120 million in Bitcoin (BTC) as part of a plan to absorb the assets of the Osprey Bitcoin Trust (OBTC). The deal was announced on Aug. 27 in a joint statement by Bitwise and Osprey Funds, that shared details about an Asset Purchase Agreement that will see OBTC holders exchange their shares for those in Bitwise’s Bitcoin ETF (BITB) as they liquidate their OBTC shares. This transaction is expected to close later this year, pending final conditions.
Osprey Funds is based in Fairfield, and launched OBTC on the OTC market in February of 2021. It offers U.S. investors exposure to Bitcoin with a management fee of 0.49%.
OBTC struggled to maintain its market position against the Grayscale Bitcoin Trust (GBTC), especially after GBTC converted to a spot Bitcoin ETF. Osprey even filed a lawsuit against Grayscale in January of 2023, alleging that Grayscale’s misleading advertising allowed it to dominate the market.
By March, Osprey started exploring strategic alternatives, including the potential sale or liquidation of OBTC, as the trust’s units were trading at a discount to Bitcoin's value. The trust’s three-year return currently stands at around 9.5%, compared to Bitcoin’s 23.5% over the same period.
Osprey’s founder and CEO, Greg King, believes the acquisition by Bitwise is the best option for all parties involved.
Over the past month, OBTC has been trading at a discount of 3% to 5% relative to Bitcoin, while Bitwise’s BITB has remained closer to Bitcoin's value. Since its launch seven months ago, Bitwise’s spot Bitcoin ETF has attracted $2 billion in investor funds, and it offers a very competitive management fee of 0.20% compared to OBTC's.
Spot Bitcoin ETFs End Inflow Streak
U.S. spot Bitcoin exchange-traded funds (ETFs) experienced a reversal in inflows on Tuesday that ended an eight-day streak of positive flows.The spot Bitcoin ETFs were hit with a net outflow of $127 million after previously drawing in $756 million during the eight-day run.
Bitcoin ETF flow (Source: Farside Investors)
The outflows were mainly driven by Ark & 21Shares’ ARKB, which reported negative flows of $101.97 million. Grayscale’s GBTC also saw net outflows of $18.32 million, while Bitwise’s BITB recorded $6.76 million in outflows. Eight funds, including BlackRock’s IBIT, reported zero flows on Tuesday.
Excluding Valkyrie’s BRRR, the U.S. spot Bitcoin funds recorded a total trade volume of $1.2 billion on the day. Since January, these funds have accumulated $17.95 billion in net inflows.
Ethereum ETF flow (Source: Farside Investors)
Meanwhile, spot Ether ETFs continued their nine-day streak of negative outflows. On Tuesday, the funds reported $3.45 million in net outflows. Grayscale’s Ether fund recorded the largest outflow at $9.18 million, while Fidelity’s FETH and Bitwise’s ETHW managed to counter this with net inflows of $3.88 million and $1.86 million, respectively.
Spot Ether funds saw a trading volume of $129.95 million, which was a big drop from the late July volumes of around $900 million. Overall, these funds have accumulated total net outflows of $481.32 million.
BlackRock Launches Ethereum ETF in Brazil
BlackRock is set to launch its Ethereum ETF on the Brazilian stock exchange as a Brazilian depositary receipt (BDR), which is a certificate representing shares of foreign companies traded in Brazil. The ETF carries the ticker ETHA39, and will debut on the B3 exchange on Aug. 28. This move comes not long after BlackRock’s iShares Ethereum Trust (ETHA) ETF launched in the U.S.
In March, BlackRock introduced its iShares Bitcoin Trust ETF (IBIT) in Brazil, which offers a high-quality access vehicle to Brazilian investors with a reduced fee of 0.12% for the first year. The new ETHA39 product is expected to trade between R$40 and R$50, depending on the ETF’s performance.
According to Nicolas Gomez, the head of ETFs at BlackRock for Latin America, the launch of ETHA39 allows investors to access the two largest cryptocurrencies by market cap, Bitcoin and Ethereum. Cristiano Castro, director of BlackRock in Brazil, also shared that the launch will simplify investors' access to Ethereum.
While Brazil recently approved Solana-based ETFs, BlackRock has no plans to file a Solana ETF in the near future. Samara Cohen, CIO of ETF and index investments at BlackRock, stated that the firm is focused on the "investability" of assets and currently believes Bitcoin and Ethereum are meeting the necessary criteria for an ETF. She also pointed out that it may take some time before BlackRock explores other cryptocurrencies for ETF offerings.
Samara Cohen interview with Bloomberg (Source: Bloomberg)
CME Group to Launch Bitcoin Friday Futures
The Chicago Mercantile Exchange (CME) Group is launching Bitcoin Friday futures (BFF), which is a new futures product that is designed for retail investors interested in cryptocurrency. BFFs will debut on Sept. 30 and will be sized at one-50th of a Bitcoin, which is smaller than similar products like Coinbase's "nano" Bitcoin futures, which are sold in increments of one-100th of a Bitcoin.
These contracts will be cash-settled every Friday against the CME CF Bitcoin Reference Rate New York Variant (BRRNY), a benchmark for Bitcoin’s spot price.
According to Giovanni Vicioso, CME Group’s global head of cryptocurrency products, the smaller-sized contracts will make it possible for investors of all sizes, from institutions to active retail traders, to better manage their Bitcoin exposure on a regulated exchange. Bitcoin futures have gained a lot of popularity in the U.S. In fact, open interest on CME Bitcoin futures contracts neared 30,000 on Aug. 26.
Bitcoin futures volume and open interest (Source: CME Group)
Each CME Bitcoin futures contract is currently sized at 5 Bitcoin. However, CME faces competition from Coinbase Derivatives, which offers futures contracts for Bitcoin, Ethereum, and other cryptocurrencies like Litecoin and Dogecoin.
Futures contracts are standardized agreements to buy or sell an underlying asset at a future date, and are essential tools for institutional investors’ hedging strategies. They are also popular among speculators due to their leverage potential.
Tanmay Sheth, director of futures at Webull, a retail-oriented electronic trading platform, shared that the new Bitcoin Friday futures provide a cost-efficient way for global traders to gain Bitcoin exposure, manage portfolios, and explore new trading strategies. Other cryptocurrency derivatives, including options, are also expected to launch on U.S. exchanges in the near future.
