Partner Reports

Xapo Bank + Glassnode: Generating Yield on Bitcoin

This report explains how institutions can earn a yield on Bitcoin through lending, futures, options and on-chain strategies, and what each route returns for the risk it carries.

Glassnode

• 2 min read
Xapo Bank + Glassnode: Generating Yield on Bitcoin

There are several ways to earn a yield on Bitcoin. One is the futures carry: leveraged longs pay a premium to keep their positions open, and a holder collects it by buying Bitcoin and selling a futures contract against it. The carry has only beaten the yield on a short-dated Treasury when the market ran hot. Its peaks came in momentum phases, and for much of this year it paid less than that yield.

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Red stretches mark the carry paying less than a two-year Treasury, roughly three quarters of 2026's trading days; the 46% and 29% peaks both came in momentum phases.
Red stretches mark the carry paying less than a two-year Treasury, roughly three quarters of 2026's trading days; the 46% and 29% peaks both came in momentum phases.

The options premium is another, and a steadier one. The seller of an option is paid for the volatility the market expects, called implied volatility. It has closed above the volatility Bitcoin then delivered on nearly four days in five, and sellers of those options collect the difference. The gap is narrower than its own recent norm, and it has not gone away.

The lower panel is the premium options priced over what Bitcoin then delivered: positive on 78% of days since 2019.
The lower panel is the premium options priced over what Bitcoin then delivered: positive on 78% of days since 2019.

Institutions most often collect the options premium through a covered call. Selling a call option against Bitcoin already held brings the premium in up front, and the holder's gain stops at the strike price. The cost is the rally above it, which in a strong year is the part of Bitcoin's return that mattered.

The premium arrives up front, the holder's gain stops at the strike, and everything above it belongs to the buyer.
The premium arrives up front, the holder's gain stops at the strike, and everything above it belongs to the buyer.

Our research with Xapo Bank maps all four routes open to institutional holders, credit and lending, basis and derivatives, volatility and options, and on-chain, with what each realistically nets across a cycle and what each one gives up. Available to professional and institutional investors at https://content.glassnode.com/generating-yield-on-bitcoin

To explore the data and insights, download the full analysis in PDF format.

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Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies.