Coinbase Launches Bitcoin Yield Fund for 4% to 8% Returns
1min read Coinbase Asset Management is set to introduce a new investment product, the Bitcoin Yield Fund, on May 1. This fund is designed to provide non-US institutional investors with an opportunity to earn consistent returns on their Bitcoin holdings. Participants in the fund can expect to receive yearly net profits ranging from 4% to 8%, paid in Bitcoin. This new offering aims to attract institutional players by providing a competitive alternative to yield-generating cryptocurrencies like Solana and Ethereum, which offer staking rewards.
The Bitcoin Yield Fund will employ the “cash-and-carry” trade strategy, a common approach in traditional finance that leverages the price differences between Bitcoin spot prices and Bitcoin perpetual swaps. Perpetual swaps are futures contracts that do not expire, and their prices should ideally mimic Bitcoin’s actual value. However, during market rallies, the prices of perpetual swaps often diverge from spot values as traders rush to capitalize on optimistic trends. The fund will exploit this misalignment to generate passive income for Bitcoin investors, with the strategy being most effective during Bitcoin rallies when the price discrepancy widens. The primary risk is that yields may reduce or become negative during bearish markets.
Coinbase Asset Management president Sebastian Bea highlighted the significance of this new product, stating that the next cycle in digital asset investment requires better products to enable institutional participation. He believes the Bitcoin Yield Fund is well-suited for this task due to its conservative and compliant investment strategy. The fund will ensure low leverage to reduce risks and will keep customer funds on coinbase and other authorized custodians to secure underlying assets. Only companies outside the US are eligible to participate in the fund, likely due to regulatory constraints in the United States.
This launch comes at a time when digital assets are poised for robust gains. Bitcoin has shown resilience, holding above $90,000 in the past week and teasing a break past the crucial obstacle at $95,000. The prevailing market sentiments support continued recovery for Bitcoin, with investors purchasing the top asset after its latest rebound, indicating conviction of extended rallies. The #Bitcoin Accumulation Trend Score is nearing 1, signaling intense accumulation and strong holder conviction. Bitcoin is currently trading at $95,390, and a decisive candlestick closing above $95,000 could catalyze steady rallies to new all-time highs beyond $110,000.
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