Professional and institutional investors have allocated more than 750 Bitcoin to Starboard Sygnum BTC Alpha Fund in roughly four months. According to Sygnum, this is a sign that institutions increasingly want ways to earn yield on BTC rather than rely only on price appreciation.
The digital-asset banking group said the Cayman Islands–domiciled fund, launched in October 2025 with partner Starboard Digital, generated an annualised 8.9% net return in BTC for Q4 2025, using systematic, market-neutral arbitrage across spot and derivatives markets.
“As Bitcoin becomes a core portfolio allocation for institutional investors, we’re seeing growing demand for strategies that can generate returns beyond simple price appreciation,” said Markus Hämmerli, who leads the BTC Alpha Fund offering at Sygnum.
“The fund’s Q4 performance demonstrates that professional Bitcoin management can deliver meaningful results even when spot markets are flat or declining,” Markus added.
A bet on arbitrage as the “basis trade” gets crowded
Sygnum’s pitch lands as more institutional capital has moved into cash-and-carry / basis trades—typically buying spot BTC (or a spot BTC ETF) while shorting futures to capture the futures premium—pressuring spreads as more players compete for the same carry. CF Benchmarks has described basis trading as a spot-and-futures pairing that seeks to profit as prices converge, and noted how regulated spot exposure plus CME futures access has made the trade more accessible to institutions.
But carry is not “risk-free.” The BIS has warned that crypto cash-and-carry can face funding and margin risks, where adverse basis moves can trigger margin calls and forced liquidation before convergence.
As per Sygnum, BTC Alpha Fund is designed to be market-neutral—seeking returns “independent of spot price movements”—by capturing pricing dislocations across major venues and instruments, then converting gains back into BTC to compound holdings over time.
Q4 2025: Fund’s BTC-denominated gains vs. Bitcoin’s spot drop
Sygnum reported an annualised 8.9% net return in BTC for Q4 2025. Annualised figures aren’t the same as quarterly performance, but that pace implies roughly ~2.2% BTC growth over the quarter if returns were earned steadily.
Bitcoin’s spot price fell sharply across Q4 2025. As per CoinMarketCap Bitcoin data, BTC closed Oct. 1, 2025 at $114,057.59 and ended Dec. 31, 2025 at $88,429.58—a drop of about 22% over the period.
That divergence is central to the “why it matters” argument: a strategy that adds BTC in a down quarter can appeal to allocators who treat Bitcoin as a strategic holding and want to increase coin count even when markets are volatile.
Still, investors remain exposed to Bitcoin’s long-term price: if BTC falls, the USD value of a BTC-denominated portfolio can still decline—even if the strategy grows the BTC balance.
What Sygnum and Starboard are offering
Sygnum’s describes the fund as:
- Cayman Islands–domiciled with monthly liquidity and a risk management framework aimed at professional allocators.
- Targeting 8–10% annual returns (net) paid in Bitcoin through arbitrage strategies.
- Integrated with Sygnum’s banking stack, including the ability for eligible clients to use fund shares as collateral for USD Lombard loans, potentially reducing the need to sell BTC to raise liquidity.
“Generating yield on Bitcoin and still maintaining exposure to its appreciation potential has been a persistent challenge for institutional investors,” said Nikolas Skarlatos of Starboard Digital. “The fund’s early results validate that institutional-grade Bitcoin yield strategies and aims targets to generate 8-10% annual returns across market conditions.”
Competitive landscape: Coinbase, Syz, and other BTC-yield style strategies
Sygnum isn’t alone in trying to industrialize “BTC yield” for institutions:
Coinbase Bitcoin Yield Fund (CBYF): Coinbase Asset Management launched an institutional product in 2025 targeting 4–8% net returns in BTC over a market cycle, positioning it as a more conservative approach that avoids certain higher-risk lending strategies.
Syz Capital BTC Alpha Fund: Syz Capital (Syz Group) launched a BTC-denominated fund of crypto hedge funds in March 2025, saying it debuted with roughly 2,000 BTC and aimed for low-volatility, market-neutral returns; Syz also cited its SyzCrest program’s 20% annualised gross returns with 6% volatility track record in its announcement.
Hilbert Group / Xapo Bank: Hilbert Group partnered with Xapo Bank to launch a $175 million bitcoin yield hedge fund.
What’s different about Sygnum’s approach is the combination of regulated bank distribution + custody + lending. Sygnum is attempting to package “BTC carry” inside a bank-grade wrapper rather than a standalone hedge fund experience.
Why the 750 BTC seed matters
Beyond the performance headline, the 750 BTC figure is the signal institutions watch: it suggests allocators may be moving from talking about Bitcoin as a strategic holding to building portfolio overlays that aim to systematically increase BTC units.
It also reflects a market structure shift. As the basis trade becomes more crowded and spreads compress, investors may prefer actively managed, market-neutral approaches that can rotate between arbitrage sources (spot-futures basis, perp funding, cross-venue dislocations, options skews) rather than depend on a single carry stream—especially when conditions change fast.
At the same time, the core risks remain: funding/margin dynamics, venue and counterparty exposures, execution quality, and liquidity constraints—variables that can matter more as volatility regimes shift.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Read our Editorial Policy. Parts of this article were drafted/ researched with the assistance of AI tools and subsequently reviewed, edited, and verified by the author and our editorial team to ensure accuracy and journalistic integrity. The final version reflects human editorial judgment and fact-checking. Read our AI Policy.
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