Wave Financial, an asset management firm based out of Los Angeles, is looking to corner the cryptocurrency financial products space with a bold new initiative.
In the wake of cryptocurrency exchanges and other investment platforms launching cryptocurrency derivatives trading platforms, Wave Financial is now ready to launch the Wave BTC Income & Growth Digital Fund, a fund which it claims will be the first yield fund based on crypto derivatives. The asset management firm announced the news via a press release.
Speaking on the news, Ben Tsai, the Managing Partner at the firm, touted the fund as a solid investment product which will be based on crypto assets. He added that the firm has been able to partner with several prominent crypto firms; including Fidelity, which will be providing custody services for the fund.
Markets move fast & the excitement around political comments surrounding BTC will mostly die down. The narrative will move back to what matters most & that's market structure. As crypto evolves a better derivatives product mix is sorely needed to give hedgers a chance to maneuver
— Jason Urban (@JUrban_DBL) July 14, 2019
Per the release, the fund will be generating income on a monthly basis, with the premium from selling call options, and strikes being about 20 percent higher than the current price. It also aims to distribute dividend at a 1.5 percent net value of the Bitcoin held in the fund, essentially meaning an annual yield of 18 percent.
Tsai added that a 100 percent basis points fixed management would be charged annually will be charged, while 30 percent will be taken off any returns higher than the 18 percent yield. Subscriptions have been opened, but as at press time, no investors have confirmed their subscriptions.
Judging investors’ interest
Such funds and their structures have a way of exciting investors. However, it seems too soon to make judgments on whether investors will actually be interested in this.
Tsai confirmed that several firms, particularly in the Asian and Latin American region, have confirmed their interest in the fund, but this wouldn’t be the first time that a product got a lot of interest and ended up suffering slightly lackluster traction.
This time last week, crypto investment platform Bakkt launched its physically-delivered Bitcoin futures contracts; a product which numerous investors and enthusiasts seemed to have been excited about.
However, even the excitement around the launch didn’t seem to help it so much. Within the first 24 hours, only 71 contracts were sold, with a last recorded price of $9,875 per Bitcoin. However, as at press time, the number has seen a slump to 69 contracts being sold, with the last recorded price being $8,050.
Market slump could stall traction
Many in the crypto space believe that the level of traction that crypto-based financial products get is usually tied to the value of the cryptocurrencies themselves at the time. Sadly, the market seems to be stalling at this point; Bitcoin is trading at $8,053, down about 0.7 percent in the last 24 hours.
For an asset which was steadily above the $10,000 comfort line when the month began, it seems more obvious now that the effects of the rally which began back in June are beginning to wear off. Investors are also scared of a potential slump in the market, and thus, financial products just seem to be too much of a risk at this point.
Regardless, it would be interesting to see how well the Wave BTC Income & Growth Digital Fund eventually does.