The Los Angeles based Wave Financials recently made the announcement concerning the launch of a bitcoin derivatives based yield fund and Fidelity will be the provider of custodial services for the funds’ BTC reserves. Wave financial crypto fund piloting is a segment of an increasingly growing trend toward the launching of BTC derivative products. The group has also announced that the derivatives marketplace will provide options on its bitcoin futures during the first quarter of 2022.
Option strategies are increasingly growing to become a popular trend within the cryptocurrency industry and markets. In the recent past Wave financial commenced a new bitcoin derivative-based yield fund. By definition, a derivative is simply a contract that derives its value from the prices of things like commodities, currencies, stocks, and even bonds.
From the Year 2017, BTC market prices have been employed for indexes and market sentiment data. By utilizing such instruments, financial institutions can engage themselves in the creation of swap agreements, forward contracts, options contracts, and even futures.
As a rule of thumb, options are established following futures markets that become more mature, thus allowing traders to profit from the ebb and flow linked to market sentiments. The wave BTC income and Growth digital fund is an integrated fund that stems from the British Virgin Islands. The fund has agendas to allow investors to generate yield following the sale of call options on the BTC reserves held in the fund.
As per the firm, Fidelity digital assets will be the providers of custodial services for the funds BTC reserves. “For high-net-worth investors’ appetite for innovative yield product with upside potential is strong. This product monetizes higher volume volatility of BTC to deliver yield independent of the interest rate environment at the same time, maintaining some upside exposure.” Benjamin Tsai, who is the president of Wave financial, made a point of explaining.
Wave insists that the fund is geared towards the distribution of dividends of up to 1.5% of net asset value per month. Subsequently, the fund will aim for an 18% target annual yield, and any excesses will be directed to acquiring even more BTC. The excess, less a performance fee will see the overall net asset value develop further as Wave explained.
The Wave BTC income and Growth digital fund also appear to have plans underway to issue a fund based token that will allow for trade on alternative trading systems at a later date that is yet to be announced.
The company insisted that “the mission of Wave is to provide investors with diversified exposure to crypto assets which will be an alternative way to hold BTC exposure.” This is according to David Siemer, who is the chief executive officer of Wave and who made the above sentiment during the announcement of the Bitcoin-based derivatives