Major crypto exchanges have already made crypto derivatives more enticing and accessible to investors, so now Wave Financial’s Wave BTC Income & Growth Digital Fund is ready to provide custody for the fund.
What’s Missing in the Crypto Market?
According to the managing partner of Wave Financial Ben Tsai, the crypto market is missing “a lot of very solid traditional types of products, but with crypto assets.”
Tsai announced that Fidelity Digital Assets will provide custody for the fund so that a new market of yield products would be able to join the crypto space. This way, the creativity of the traditional funds and the growth of the crypto derivatives platforms would make a great team.
Although the new fund is now open for subscriptions, no investors have yet subscribed, Tsai adding:
“We have a number of investors that have expressed interest and we are working to get them the actual private placement memorandum and subscription agreement.”
According to Samuel Lee, the financial advisor at SVRN Asset Management (Chicago), explains why this fund is tricky, considering it has crypto derivatives such as options:
“They are a very new asset class whose market is not very efficient. Skilled investors are going to take a lot more advantage of those who are less skilled in such markets when compared to more mature equity and fixed income markets.”
He added that even though the firm realizes 18% monthly yield, the most important is the fund’s total return:
“A lot of income funds with very high yields are often sacrificing price returns. While you are getting hefty premiums, you could be sacrificing all that upside potential.”
Nonetheless, the inefficiency of the market could also create an opportunity for crypto-derivative funds, explained Lee, saying that fewer smart people will look at it and the mispricing would be even greater.
Binance, Deribit, Galaxy Capital’s Caspian, CME Group and Others to Offer Crypto Derivates
Other companies are looking towards offering traders crypto derivatives.
We’re looking at Binance, which acquired crypto exchange JEX to offer its traders more crypto derivatives offerings. Deribit also became one of the first company to offer crypto futures, as well as providing large-volume trades of bitcoin and ether derivatives.
Galaxy Capital’s platform Caspian also hopped into the cryptocurrency derivatives trading, including futures and options.
CME Group announced this month that they will start offering options on the bitcoin futures contracts in Q1 2020.
Seed CX subsidiary Zero Hash will also include in the future options and support derivatives transactions.
What Do Investors Think?
Wave is still waiting for investors to subscribe, so we don’t know it if will gain traction or not. Tsai said that firms are interested in distributing the fund, and the main targets are accredited investors and high-net-worth individuals. So far, there’s one firm in Southeast Asia that wants to have exclusivity in the region. Tsai added that Latin American investors “in the wealth management space actually buy similar products as Asian investors,” so he’s expecting some of these investors to join as well.
Tsai concluded that this is a less volatile method to earn from investing in bitcoin, as the fund gives investors premium if the BTC price increase is lower than 20%.
