TLDR
- Coinbase will launch Bitcoin Yield Fund on May 1, targeting 4%-8% annual returns
- The fund is designed for non-US institutional investors seeking passive income on Bitcoin
- Yield will be generated through cash-and-carry strategy (basis trading)
- Abu Dhabi-based Aspen Digital is among the fund’s backers
- Future yield strategies may include lending and options trading
Coinbase, the world’s third-largest cryptocurrency exchange by volume, is set to launch its Bitcoin Yield Fund (CBYF) on May 1, 2025. The fund aims to provide institutional investors outside the US with a way to earn passive income on their Bitcoin holdings.
The new offering targets annual net returns of 4% to 8%. This comes as Bitcoin has surged to around $95,000, driven largely by institutional investment.
The fund addresses a key limitation for Bitcoin holders. Unlike Ethereum and Solana, Bitcoin does not offer staking opportunities for passive income generation.
Coinbase announced the fund in an April 28 blog post. “To address the growing institutional demand for bitcoin yield, Coinbase Asset Management is excited to introduce the Coinbase Bitcoin Yield Fund,” the company wrote.
How the Fund Works
The yield will be generated initially through basis trading, also known as a cash-and-carry strategy. This approach profits from the difference between spot Bitcoin prices and futures contracts.
The strategy has become popular among hedge funds. By late 2024, these funds had established a record $14.2 billion in Bitcoin short positions while simultaneously buying spot Bitcoin ETF shares.
Aspen Digital, a digital asset manager based in Abu Dhabi and regulated by the Financial Services Regulatory Authority, is among the fund’s backers. They confirmed that while basis trading will be the initial yield strategy, lending and options strategies may be employed in the future.
Coinbase designed the fund to reduce investment and operational risks typically associated with Bitcoin yield products. This approach better aligns with institutional investors’ risk appetites.
The basis trading strategy isn’t without risks. If Bitcoin prices surge dramatically, entities with short positions would need to add margin to avoid liquidation.
Another risk factor is market saturation. As more investors adopt the basis trading strategy, spreads can narrow and yields may diminish.
This trend is already visible. The short position figure on the Chicago Mercantile Exchange has dropped to $8.4 billion, down from $14.2 billion four months ago.
The Coinbase Bitcoin Yield Fund differs from past yield products like BlockFi’s platform. BlockFi generated yields through lending, which carries higher risk than the basis trade approach Coinbase is implementing.
Bitcoin’s recent price recovery to $94,000 has been fueled by ETF inflows. The week leading to April 28 saw over $3 billion in ETF inflows, the second-highest weekly figure on record.
Ryan Lee, chief analyst at Bitget Research, told Cointelegraph that Bitcoin’s recovery was mainly supported by “ETF inflows and corporate buying,” with retail interest lagging behind.
Lee suggested that retail interest may surge if Bitcoin breaks the $100,000 barrier, driven by media coverage and fear of missing out (FOMO).
BitMEX co-founder Arthur Hayes recently predicted that this might be the “last chance” to buy Bitcoin below $100,000, citing incoming US Treasury buybacks as a potential catalyst for price growth.
The Coinbase Bitcoin Yield Fund opens for business on May 1, 2025, exclusively serving non-US institutional investors seeking yield on their Bitcoin holdings.
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