Coinbase Launches Bitcoin Yield Fund Targeting 4%-8% Annual Returns

Coinbase has officially launched a Bitcoin yield fund aimed at delivering returns between 4% and 8% annually, designed specifically for institutional investors. The new fund, which will be available starting May 1, plans to generate yield through basis trading, with aspirations to later incorporate lending and options strategies.

Developed in partnership with Aspen Digital, a firm based in Abu Dhabi, the fund is tailored to non-U.S. institutional investors looking to capitalize on Bitcoin’s price movements. Initially, the fund will rely on basis trading, a strategy where profits are earned from the price gap between Bitcoin’s spot and futures markets. This technique, which gained traction in late 2024, allows traders to capitalize on discrepancies in Bitcoin’s futures prices compared to its current market value.

Despite being a relatively low-risk strategy, basis trading still carries the potential for significant losses, especially in volatile markets. If Bitcoin’s price moves unexpectedly, a short position held by the fund could lead to margin calls. However, the expected returns from the strategy still make it an attractive option for institutional investors seeking more conservative investment strategies in the crypto space.

Coinbase’s move to launch this Bitcoin yield fund comes after the volatile period of 2022, which saw the fall of crypto lenders like BlockFi. While Coinbase’s approach is more conservative, focusing on basis trading rather than lending, the company aims to provide a more stable and risk-managed way for investors to earn returns from Bitcoin.

This new fund signals growing institutional interest in Bitcoin, as large players in the market seek ways to profit from Bitcoin’s price volatility while minimizing risk exposure.