In a significant move to cater to the burgeoning demand for decentralized finance (DeFi) solutions in cryptocurrency, Swiss digital asset bank Sygnum has unveiled its latest investment vehicle, the BTC Alpha Fund. This innovative fund is designed to offer yields on Bitcoin investments without sacrificing exposure to the cryptocurrency’s price movements, marking a fresh approach in the digital asset investing landscape.
A New Era of Bitcoin Investment
The BTC Alpha Fund, developed in collaboration with Athens-based Starboard Digital, represents a strategic entry into the realm of Bitcoin-driven decentralized finance. By utilizing sophisticated arbitrage strategies, the fund aims to deliver an impressive 8% to 10% net annual return, all paid directly in Bitcoin. This setup allows investors to not only maintain but potentially increase their Bitcoin holdings, a feature that appeals to those looking to capitalize on Bitcoin’s long-term value appreciation.
Domiciled in the Cayman Islands, the fund primarily targets professional and institutional investors. This focus aligns with the growing trend among institutional players who are eager to deepen their engagement with Bitcoin beyond mere holding, seeking avenues to generate substantial income from their BTC assets.
Institutional Appetite for DeFi
The introduction of the BTC Alpha Fund comes at a time when institutional interest in Bitcoin-related DeFi products is on the rise. Analysts highlight the untapped potential in this space, with recent Binance research indicating that a mere 0.8% of Bitcoin’s supply is currently utilized within DeFi ecosystems. This statistic underscores the expansive opportunity awaiting investors willing to explore this nascent but promising market.
Julian Love, a deal analyst at Franklin Templeton Digital Assets, previously noted that this opportunity might be as vast as $1 trillion, pointing to the immense growth potential for financial products that effectively merge traditional investment strategies with the dynamic world of cryptocurrency.
Enhancing Bitcoin Liquidity
One of the standout features of the BTC Alpha Fund is its ability to enhance liquidity for long-term Bitcoin holders. Investors can pledge their fund shares as collateral for U.S. dollar Lombard loans at Sygnum, providing a pathway to unlock capital for other ventures without selling their Bitcoin holdings. This flexibility is crucial for investors who are keen to diversify their portfolios while maintaining a robust crypto position.
The fund’s structure incorporates monthly liquidity options and a stringent risk management framework. These elements are designed to offer both flexibility and security, addressing the inherent volatility of digital markets. The partnership with Starboard Digital leverages their expertise in trading and risk management, adding an extra layer of confidence for investors.
Bridging Traditional Finance and Crypto
Sygnum’s foray into Bitcoin yield funds is part of a broader strategy to expand its offerings and bridge the gap between traditional finance and the cryptocurrency economy. Over the past year, Sygnum has launched various initiatives aimed at bolstering its position as a leader in providing regulated crypto investment products.
Markus Hämmerli, who spearheads the BTC Alpha Fund initiative, emphasized the growing importance of Bitcoin in modern investment portfolios. “Bitcoin has become a key exposure in modern portfolios, and many of our clients want to stay invested while building their positions further,” he explained. Sygnum’s new fund is a testament to this evolving landscape, where institutional investors are not just looking to hold digital assets but actively seeking ways to optimize their returns through innovative financial instruments.
Looking Forward
As the cryptocurrency market continues to evolve, products like the BTC Alpha Fund could play a pivotal role in shaping the future of digital asset investments. By offering high yields and enhanced liquidity options, Sygnum is positioning itself at the forefront of this transformation, providing investors with the tools they need to navigate the exciting yet complex world of cryptocurrency.
The BTC Alpha Fund’s launch is a clear indication of the growing intersection between traditional finance and digital assets, a trend that is likely to accelerate as more institutional players recognize the potential of DeFi. With its robust framework and strategic partnerships, Sygnum is not just responding to current market demands but actively shaping the future of Bitcoin investment for years to come.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
