Coinbase Launching New Bitcoin Yield Fund
If you have been following MintDice.com for a while, you know that we are fans of using your cryptocurrency to make more cryptocurrency. On May 1st, this will become even easier thanks to Coinbase launching a Bitcoin Yield fund.
Not quite sure what a Bitcoin yield fund is? Not to worry, we are here to help. Keep reading as we perform a deep dive into yield funds, their purpose, and whether or not they might be a good idea for your portfolio.
What Are Yield Funds?
Yield funds are special types of investment accounts where certain amounts of cryptocurrency are “locked up” in exchange for a small return. In this case, we are discussing a Bitcoin yield fund where Bitcoin investors can lock up their holdings in exchange for a small percentage of returns.
How Do Yield Funds Work?
Yield funds work a bit like hedge funds in that the capital locked up is then used for a variety of investments in the hope of gaining returns. Coinbase has specifically stated that its yield fund will use locked-up Bitcoin for basis trading, a type of trading that exploits price differences in Bitcoin.
While there is no guaranteed return when investing in a yield fund, the company behind the fund will often disclose to investors the expected return. It’s important to know that while funds like these are regulated, returns are often just promises and are not guaranteed in any way, shape, or form.
Basis trading, specifically, is a low-risk trading strategy. That being said, it is not risk free and there are many instances when those engaging in basis trading have lost everything, so proceed with caution.
Currently, Coinbase is stating that they suspect/estimate that their yield fund will have an annual return of 4-8%. All yield will be paid to investors in the form of Bitcoin.
When Does the Coinbase Yield Fund Launch?
The Coinbase yield fund will launch on May 1st, 2025. But it is critical to note that the initial launch is for non-US based investors only. This is likely due to the strict investment restrictions imposed in the United States. Additionally, all of the articles we found on the topic mention that the fund is for institutional investors only.
What Does This Mean?
This means that the average, solo investor will not be able to utilize the Coinbase Bitcoin Yield fund right away. While the regulations surrounding it may change in the future, for now, unless you are an institutional investor, you cannot invest starting on May 1.
Coinbase Bitcoin Yield Fund Details
Just as with any hedge fund or investment firm, there are rules about joining and or leaving the Coinbase Bitcoin yield fund. Below are the current restrictions as posted on the Coinbase website.
· Institutional investors only (most prove qualifications)
· Non-US based
· 5 business days’ notice to withdraw funds
· New investors can enter the fund on a monthly basis
We suspect that more regulations will be announced in the future. Additionally, it may be important to know that Coinbase has entered this fund project jointly with Aspen Digital based in the UAE. Coinbase will handle customers in the EU, South America, and Africa while Aspen Digital will process customers in Asia and the Middle East.
Should You Invest in the Coinbase Yield Fund?
Ultimately, it is unlikely that the average individual reading this article will meet the qualifications to take part in Coinbase’s’ Bitcoin Yield Fund. That being said, the rules about joining this fund may change in the future, so we wanted to discuss this next part regardless.
In general, Bitcoin yield funds of any type are risky, but they are one of the few ways to make more cryptocurrency with the Bitcoin you already have. Unlike Solana and Ethereum, there is no staking Bitcoin, so if you aren’t part of a mining pool and are tired of your Bitcoins just sitting in your wallet, a yield pool like the one Coinbase is establishing is a decent option.
Just be sure you meet all the qualifications and restrictions before joining, and that you are only investing Bitcoin that you won’t need access to on a regular basis—as it can take several days to divest. Also, keep in mind that this type of investing always carries risk, so while we are reasonably sure this is a safe option in terms of scams (Coinbase isn’t one), just know that you could still lose money long term.
If you have questions about yield funds, be sure to discuss them with a financial advisor you trust before you take the leap and invest. But as far as options for investing Bitcoin go, we think this is one of the reasonable ones.
Other Options for Making Money With BTC
As we have mentioned several times, the Coinbase fund is currently only open to institutional investors. But this doesn’t mean that you should just leave your Bitcoin sitting! Below is a list of all the options for making more Bitcoin with the Bitcoin you already have, just know that we aren’t promoting any of these platforms and that you need to do your own research before putting your cryptocurrency at risk.
· Join a liquidity pool that stakes BTC on a DeFi platform
· Lend your Bitcoin to others on a DeFi lending platform
· Sovryn Bitcoin yield-generating platform (unverified)
· Binance Earn options
· Invest in a lightning node
· Invest in Bitcoin ETFs
Do note that many of these options are incredibly risky. In our opinion, the best bet for making money with Bitcoin if you aren’t an institutional lender is simply to hodl and wait for the price to increase, especially if you are risk-averse.
Overall, the Coinbase Bitcoin Yield fund is an excellent idea, and we hope that many institutional investors will take advantage. We also hope that in the future there will be more options for non-institutional investors to join similarly designed funds. For now, if you are a non-institutional investor, we recommend continuing to hodl!
