Coinbase Expects Returns in the 4%-8% Range from New Bitcoin Yield Fund
According to launch partner Aspen Digital, the Coinbase Bitcoin Yield Fund will launch on May 1st and promises initial returns through basis trading, with the intent to introduce lending and options strategies later.
Author: Helen Brown, Oliver Knight | Edited by: Stephen Alpher Updated: April 28, 2025, 6:46 PM Published: April 28, 2025, 3:53 PM
Important points:
- Coinbase Asset Management is launching a Bitcoin Yield Fund for institutional investors outside the US, targeting annual returns of 4% to 8%.
- The fund will initially generate income through underlying trading, and will then expand into lending and options strategies.
- Basis trading profits from the difference between Bitcoin futures and spot prices, although it carries risks in times of sharply increased market volatility.
Coinbase Asset Management is introducing a new fund that allows institutions to earn income from their Bitcoin (BTC) holdings.
The Coinbase Bitcoin Yield Fund will launch on May 1 for institutional investors outside the U.S., with the goal of providing net returns of 4-8% per year, according to a press release issued Monday.
Among the fund's backers is Abu Dhabi-based Aspen Digital, which said initial returns will be achieved through basis trading, with lending and options strategies to be used in the future.
So-called basis trading in Bitcoin involves taking advantage of the difference between the futures and spot markets. The strategy became popular in late 2024, when hedge funds reached a record $14.2 billion in short BTC positions while simultaneously buying shares of spot Bitcoin ETFs.
The strategy's profitability depends on the spread between the two markets, but it is not immune to risk. For example, if an entity had a $1 billion short position on a BTC futures product and the price of BTC rose sharply, that entity would have to continually add margin to avoid liquidation.
Moreover, as the market becomes more competitive, the spread and subsequent returns can become very tight. This has already led to several hedge funds exiting the trade earlier this year, and the short position on the Chicago Mercantile Exchange now stands at $8.4 billion, down significantly from the $14.2 billion recorded four months ago.
Coinbase's new product is reminiscent of previous crypto lender BlockFi's yield platform, which launched in 2019 but ultimately failed due to a price crash in 2022.
However, BlockFi's fund differed from Coinbase's latest product in that it generated returns through lending rather than risky trading.
