TLDR
- Coinbase is launching a Bitcoin Yield Fund on May 1, 2025, targeting 4-8% annual returns
- The fund is designed for non-US institutional investors seeking passive income on Bitcoin holdings
- Yield will be generated through cash-and-carry strategy (basis trading) between spot and futures prices
- Abu Dhabi-based Aspen Digital is among the backers of the fund
- Future yield strategies may include lending and options trading
Coinbase, the world’s third-largest cryptocurrency exchange by trading volume, is set to launch a new investment vehicle aimed at institutional Bitcoin holders.
The Coinbase Bitcoin Yield Fund (CBYF) will open for business on May 1, 2025, targeting annual net returns between 4% and 8% for institutional investors outside the United States.
The fund addresses a gap in the Bitcoin investment landscape. Unlike Ethereum and Solana, which allow holders to generate passive income through staking, Bitcoin lacks native yield-generating mechanisms. Coinbase aims to fill this void with a product that aligns with institutional risk preferences.
According to Coinbase’s April 28 blog post, the fund will initially generate returns through basis trading. This strategy capitalizes on the price difference between Bitcoin’s spot market and futures contracts.
The Coinbase Bitcoin Yield Fund has secured backing from multiple investors. One key partner is Aspen Digital, a digital asset manager based in Abu Dhabi and regulated by the Financial Services Regulatory Authority.
How Basis Trading Works
The basis trade has become a popular strategy in crypto markets. It involves profiting from the spread between futures and spot markets for Bitcoin.
The strategy gained prominence in late 2024 when hedge funds established record high short positions of $14.2 billion in Bitcoin futures. At the same time, these funds purchased spot Bitcoin ETF shares to balance their exposure.
However, this approach is not without risks. If Bitcoin prices surge dramatically, entities with short futures positions must add margin to avoid liquidation. Another challenge is market saturation, which can reduce the spread and potential yields.
This market dynamic has already led some hedge funds to exit the trade. The short positions on the Chicago Mercantile Exchange have decreased to $8.4 billion from $14.2 billion four months ago.
Institutional Interest Drives Bitcoin Growth
The launch comes during a period of strong institutional interest in Bitcoin. The cryptocurrency has seen price growth of over 9% in the week leading to April 28, reaching $94,000.
This recovery has been largely driven by exchange-traded fund (ETF) inflows. Bitcoin ETFs recorded their second-highest week of inflows at over $3 billion, according to Farside Investors data.
Ryan Lee, chief analyst at Bitget Research, told Cointelegraph that Bitcoin’s recovery has been primarily supported by “ETF inflows and corporate buying,” rather than retail investors. Lee suggests retail interest might surge if Bitcoin breaks the $100,000 barrier.
BitMEX co-founder Arthur Hayes recently predicted this might be the “last chance” to buy Bitcoin below $100,000. Hayes points to upcoming US Treasury buybacks as a potential catalyst for further price increases.
Future Plans for the Fund
While basis trading will be the initial yield strategy, Coinbase plans to expand its approach. According to Aspen Digital, the fund will eventually incorporate lending and options strategies to generate returns.
This diversification of yield sources could help maintain target returns even as market conditions evolve. The 4-8% yield target positions the fund as a competitive option for institutional investors seeking income from their Bitcoin holdings.
Coinbase’s new product differs from previous crypto yield platforms like BlockFi, which opened in 2019 but failed during the 2022 market crash. BlockFi primarily generated yield through lending, whereas Coinbase’s approach focuses on the lower-risk basis trade strategy.
The Coinbase Bitcoin Yield Fund launches on May 1, 2025, and will be available exclusively to non-US institutional investors seeking Bitcoin exposure with passive income potential.
