Coinbase is set to launch its Bitcoin Yield Fund on May 1 for institutional investors outside the US, targeting a net return of 4-8%. The fund is backed by various investors and aims to reduce risks associated with Bitcoin yield products while capitalising on the current trend of institutional demand. Bitcoin has recently experienced a price rally, driven in part by significant ETF inflows as institutions show growing interest in cryptocurrency investments.
In a significant move for institutional investors, Coinbase, now the third-largest cryptocurrency exchange globally, will unveil the Coinbase Bitcoin Yield Fund (CBYF) starting May 1. This fund is designed to give exposure to Bitcoin while specifically targeting institutional participants based outside the United States. Coinbase announced it expects an annual net return between 4% and 8% on holdings, as detailed in a blog post shared on April 28.
This fund springs from a noticeable surge in interest among institutions looking for ways to generate Bitcoin yield. Coinbase Asset Management is particularly eager to meet this increasing demand with the new fund. Supported by various investors, including Abu Dhabi-based asset management firm Aspen Digital, which is regulated by the Financial Services Regulatory Authority, the fund aims to fill a gap in the market.
To generate yield, the CBYF will utilise a cash-and-carry strategy that capitalises on price differentials between spot Bitcoin and derivatives. This is particularly timely because holders of Bitcoin have historically lacked means for passive income through staking—unlike Ether and Solana holders, which contributes to the fund’s relevance, as pointed out in the announcement. Moreover, Coinbase asserts that this new structure will help reduce the investment and operational risks usually tied to Bitcoin yield products, making it more appealing to institutional investors.
The launch of this fund comes amidst a backdrop of rising institutional enthusiasm for cryptocurrencies. Coinbase attributes this growing interest to substantial inflows into Bitcoin, which have propelled its price recovery recently. Bitcoin surged by over 9% in the week leading to April 28. This price momentum is bolstered by record inflows into exchange-traded funds (ETFs), which saw their second-largest week ever, exceeding $3 billion, according to Farside Investors’ data.
Analysts note that Bitcoin’s rebound, which saw its price climb back to around $94,000, results primarily from increased ETF inflows and corporate buying activity, even as retail interest appears to be lagging. Ryan Lee, chief analyst at Bitget Research, mentioned that retail participation seems less robust right now. Adding to the buzz, BitMEX co-founder Arthur Hayes remarked on April 21 that the opportunity to buy Bitcoin under $100,000 might be dwindling, as upcoming US Treasury buybacks could serve as a key catalyst for further price movements.
