London-based Nickel Digital Asset Management (Nickel), a regulated crypto hedge fund manager, has “outperformed the S&P500 since January 2020, despite the initial strong performance of equities during the COVID period.”
As noted in an update shared with CI, its Digital Asset Arbitrage Fund had “returned 25.5% net of fees between January 1, 2020, and May 24, 2022, compared with 22.2% by the S&P 500 and 25.5% by the NASDAQ Composite over the same period.”
The corresponding figures for 2022 YTD “are -0.6%, -17.3% and -28.0% respectively. Bitcoin has fallen by -37% this year and by -60% from ATH in Nov 2021.”
The May crypto crisis has “seen another bout of extreme volatility with the Terra Luna token losing 99.9% of its value and dragging other digital assets down.”
Even some stablecoins – “which are meant to retain parity with mainstream assets – have ‘de-pegged’ on several occasions.”
Investors relying on safer asset classes “such as US High Yield, EU High Yield, 10-year US Treasuries have seen returns hammered too, with those assets down -10.8%, -8.4% and -9.8% YTD, respectively.”
Nickel’s arbitrage strategy “is designed to harness extreme volatility and protect capital while delivering uncorrelated long-term returns.”
Nickel’s Arbitrage Fund “was up +15.3% in 2021, as compared to its own long-term guidance of 8-10%pa.”
The Fund’s best month “was +4.08%, while its worst month was -0.32%, highlighting skew towards positive performance.”
Anatoly Crachilov, Founding Partner and CEO of Nickel Digital, said:
“Focusing on sophisticated low-latency algorithmic trading and pursuing a range of arbitrage strategies in both spot and derivative markets enables Nickel Digital to harness market volatility, delivering strong returns during market expansion, while protecting capital in distressed markets.”
Michael Hall, Founding Partner and CIO of Nickel Digital, added:
“Market-neutral strategies particularly shine during sell-offs by safeguarding investors’ capital. This allows investors to achieve long-term compounded capital appreciation with volatility of below 4%.”
As noted in a release, Nickel Digital Asset Management is “a London-based FCA authorized and regulated investment manager that offers a range of digital asset strategy solutions for institutional investors.”
Its mission is to provide “a gateway for traditional investors into the digital assets market across a broad range of risk profiles.”
The firm runs “a range of systematic strategies dedicated to the digital assets market, including market-neutral arbitrage and multi-strategy funds.”
It has also “developed a range of directional solutions, aiming to capture the structural expansion of digital assets market.”
Nickel is “led by a senior team of traders and investment professionals with experience from major Wall Street banks, such as Bankers Trust, Goldman Sachs, JPMorgan, Morgan Stanley, BofA Merrill Lynch, Rothschild, and Credit Suisse, as well as global hedge funds, including DE Shaw, Eisler Capital, and Cheyne Capital.”
Risk management is “the core of Nickel’s approach to investment management.”
This was “evidenced in March 2020 and May 2021 when Nickel preserved the value of investor capital and delivered positive returns at the time of market implosion.”
Nickel currently “has four funds investing in the digital asset space. Its market-neutral Digital Asset Arbitrage Fund pursues an absolute return strategy without expressing directional views on the underlying crypto assets market.”
