Coinbase Asset Management is rolling out a new fund for institutions to receive yields from Bitcoin (BTC) holdings.
According to a press release on Monday, the Coinbase Bitcoin Ildo Fund will open on May 1, with the Coinbase Bitcoin Ildo Fund aiming to provide a net profit of 4% to 8% annual net profit.
Among those supporting the fund, Abu Dhabi-based Aspen Digital said future lending and options strategies will generate yields through base transactions.
So-called Bitcoin-based trading involves exploiting the spread between futures and spot markets. It became popular in the 2024 tail end as the hedge fund hit a record high of $14.2 billion in the BTC short position and simultaneously bought spot Bitcoin ETF shares.
This strategy generates yields according to the spread between both markets, but is not affected by risk. For example, if an entity is short on $1 billion on a BTC futures product and the price of BTC rises significantly, the entity must continue to add margins to avoid liquidation.
Also, as trade becomes more crowded, spreading and subsequent yields can be very thin. This has already led to many hedge funds with many hedge funds withdrawing trade earlier this year, with the short Chicago Mercantile Exchange figure now reaching $8.4 billion, from $14.2 billion a month ago.
Coinbase’s new product will spark memories of the former Crypto Lender Blockfi’s Alde Platform, which opened in 2019 but ultimately failed in 2022 with a price crash.
However, unlike Coinbase’s latest product, Blockfi’s funds produced yields through lending rather than low risk-based transactions.