A US-based wealth manager has claimed an industry milestone with the launch of the first cryptocurrency derivatives-based yield fund on the market.
Wave Financial says that its Wave BTC Income & Growth Digital Fund aims to generate yield by selling call options on bitcoin (BTC) held in the Fund.
The asset manager expects attractive premiums due to bitcoin’s volatility which should provide income that can be paid out monthly. It aims for a 1.5% dividend of NAV per month, equating to an 18% target annual yield.
"For high net worth investors, appetite for innovative yield product with upside potential is strong. This product monetizes higher volatility of BTC to deliver yield, independent of the interest rate environment, while keeping some upside exposure," said Benjamin Tsai, President of Wave.
The firm acknowledges that investments in fund and tokens carries a high degree of risk and says it is suitable only for sophisticated investors who have experience investing in private funds employing the Fund's strategies, are familiar with investing in and trading Crypto Assets and can afford the loss of their entire investment in Fund/Tokens.
"The mission of Wave is to provide investors with diversified exposure to crypto assets," said David Siemer, CEO of Wave. "This is an alternative way to hold BTC exposure."
The Fund and Tokens will only be available outside the US to non-US persons and to ‘accredited investors’ within the US.
The US finance and operations director for eToro told Bitcoin Magazine that he thinks the new product is “compelling” and offers sophisticated investors a new way to play the market.
“We’ve already seen retail investors embrace the crypto asset class but building out these advanced tools is an essential step in spurring institutional adoption,” he said. “eToro is also working to build this infrastructure for advanced traders, offering tokenized currency, commodity and crypto pairs.”
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