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By Helene Braun, Oliver Knight|Edited by Stephen Alpher
Apr 28, 2025, 3:53 p.m.
- Coinbase Asset Management is launching a Bitcoin Yield Fund for non-U.S. institutional investors, targeting 4%-8% annualized returns.
- The fund will initially generate yield through basis trading, with lending and options strategies expected to follow.
- Basis trading profits from the spread between bitcoin futures and spot prices, though it carries risks if market volatility surges.
Coinbase Asset Management is rolling out a new fund for institutions to receive a yield on their bitcoin (BTC) holdings.
STORY CONTINUES BELOW
Opening on May 1 for non-US institutional investors, the Coinbase Bitcoin Yield Fund aims to deliver a 4% to 8% annualized net return, according to a press release on Monday.
Among those backing the fund, Abu Dhabi-based Aspen Digital said yield will initially be generated through basis trading, with lending and options strategies to be used in the future.
The so-called bitcoin basis trade involves capitalizing on the spread between futures and spot markets. It became popular at the tail end of 2024 as hedge funds notched a record high of $14.2 billion in BTC short positions, whilst simultaneously buying spot bitcoin ETF shares.
The strategy produces yields depending on the spread between both markets, but isn’t immune to risk. For instance, if an entity was short $1 billion on a BTC futures product and the price of BTC was to wildly surge, that entity would need to keep adding margin to avoid liquidation.
Also, as the trade becomes more crowded, the spread and subsequent yield could become very thin. This has already led to a number of hedge funds exiting the trade early this year, with the short figure on Chicago Mercantile Exchange now standing at $8.4 billion, down from $14.2 billion four months prior.
Coinbase’s new product stirs memories of former crypto lender BlockFi’s yield platform, which opened in 2019 but ultimately failed alongside crashing prices in 2022.
BlockFi’s fund, however, differed from Coinbase’s latest product in that it generated its yield through lending, rather than a lower-risk basis trade.
Helene is a New York-based markets reporter at CoinDesk, covering the latest news from Wall Street, the rise of the spot bitcoin exchange-traded funds and updates on crypto markets. She is a graduate of New York University’s business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.
Oliver Knight is the co-leader of CoinDesk data tokens and data team. Before joining CoinDesk in 2022 Oliver spent three years as the chief reporter at Coin Rivet. He first started investing in bitcoin in 2013 and spent a period of his career working at a market making firm in the UK. He does not currently have any crypto holdings.
