Wave Financial CEO: Institutional Adoption of Bitcoin, DeFi and NFTs Will Increase

Decentralized finance, or DeFi, is still in its very early stages and there’s huge innovation on its way, Wave Financial Group CEO and Co-founder David Siemer told Blockworks in an interview. 

Siemer has believed in the value of crypto for a while and says that adoption will increase across the crypto ecosystem.

“I started getting involved in bitcoin in 2010, before there was even talk of cryptocurrencies, it was just bitcoin,” Siemer said. “I was really early and my friends were fundamental in the space. But it was hard to tell where it was going to go back then,” he said. In February 2012, Siemer bought bitcoin for the first time at about $8 each. Bitcoin’s price is up about 749,900% from that price. “I still have some of those early bitcoins. Obviously, I wish I could have the ones I sold back,” he joked.

Fast-forward to early 2016, he went into crypto full time. He launched his first crypto fund in 2017 and started Wave Financial in 2018. “The changes in this space are everything,” he said. 

“The most fascinating thing about bitcoin, for me, is that it is really the first asset in history that’s purely based on supply and demand,” Siemer said. Personally, he owns a number of crypto assets directly, but mostly just bitcoin, ether and cardano, he said. 

“The more people that want it, it just goes up. Unlike Apple stock, where eventually people will say its price doesn’t make sense because their earnings don’t justify its price level, that’s just not true of crypto. At least with bitcoin and other store value coins, there’s nothing to point to other than people want it or don’t want it and that drives these parabolic moves and adoption is going to increase,” he said. 

Wave Financial recently hit about $1.5 billion assets under management (AUM) as the space continues to mature, Siemer said. The company added $500 million AUM in just 45 days, up 50% from $1 billion AUM in mid-September, according to a previous statement. 

Wave Financial is a federally regulated investment adviser under the US Securities and Exchange Commission (SEC) and is composed of two main factors, Siemer said. It offers early-stage venture capital investments in crypto companies as well as provides asset management and treasury management. 

The company has its Wave Bitcoin Income Fund, which is a risk-managed Bitcoin product that uses bitcoin volatility and turns it into stable yielding income for clients. While the company doesn’t have any bitcoin itself, it holds crypto on behalf of clients and funds it manages, Siemer said. “We don’t typically make balance sheet investments into crypto at the parent company level,” he added. 

Clients range from high-net-worth individuals who made their money in crypto and non-crypto-focused people and businesses like a handful of Fortune 500 companies and smaller exchanges that are interested in the crypto and blockchain ecosystem, Siemer said. 

The space is constantly evolving and expanding, Siemer noted. “Adoption is going to increase, we spend a lot of time talking to multi-family offices and institutions and they’re all moving in this direction rapidly. They’re all trying to find ways to get proper exposure to digital assets in a regulated way,” he said. “So more people are buying these assets so the price kinda has to go up,” he added. 

NFTs will be worth ‘trillions’

Non-fungible tokens, or NFTs, are already on the rise, but Siemer predicts the space will grow 100 times over the next few years. 

In addition to owning cryptocurrencies, Siemer has about 15 NFTs, including a Fidenza, in his portfolio. He said he wasn’t familiar with the value of Fidenza NFTs until another one sold for 1,000 ETH, which was about $3.3 million at the time of purchase in August. 

“The NFT world is probably worth about $40 to $50 billion and it’s brand new,” he said. “But we think it’ll be worth trillions alone,” he added. 

Wave Financial just launched its NFT fund that will allow clients to invest in NFT collectibles, platforms and protocols. The target of the fund is 70% collectibles, which consists of art, gaming, NFTs, jpegs and other items in that genre and 30% infrastructure, Siemer said. 

“On the collectible side, a minor part of the strategy is figuring out which NFTs are undervalued and buying them,” Siemer said. “We’ll buy hundreds of the initial drop, which is usually when you want to do it. The prices will [increase] 10x overnight sometimes,” he said. 

The fund mainly focuses on the early-stage thesis around the NFT space and holds more liquid-market collectibles like CryptoPunks and Bored Apes. “There’s a liquid market for those,” he said. 

“ETFs will probably gobble up $50B of bitcoin”

In general, Siemer expects that the crypto space will increase about two to five times in three to five years

He said DeFi yields, innovation and bitcoin-based ETFs being approved by the SEC are driving lots of market movement right now. 

“Getting approval of ETFs was huge…and there’s a lot more coming there,” he said. “Those ETFs will probably gobble up $50 billion of bitcoin, which will moe the price a lot. You’re seeing a huge driver over there and way beyond that you’re seeing adoption grow pretty rapidly,” he added. 

“We talk to a lot of large institutions, but crypto is such a foreign concept to them still. They’re still trying to get their head around it, they approach digital assets like stocks but there’s so much more to the asset class,” Siemer said. “I predict it will be a $5 trillion sector in three years and there will be bumps along the way, there will be divots and peaks, but that’s how things go in crypto,” he said.