Nickel Digital Asset Management freezes arbitrage trading after May market rout

Nickel Digital Asset Management, a cryptocurrency hedge fund, has halted the implementation of strategies after the May market rout and is awaiting renewed optimism to resume operations. This was stated by CEO Anatoly Krachilov in an interview with Bloomberg.

Led by former JPMorgan and Goldman Sachs veterans, the fund, with AUM of $200 million, expects a parabolic rise in the value of digital assets. Previously, arbitrage across 12 assets on 17 spot and derivatives markets delivered double-digit annual returns for institutional investors.

“Our market-neutral strategy with low volatility offers a positive expected return regardless of market direction. This facilitates the entry of investors with low risk tolerance into the crypto market.”, — explained Krachilov.

According to the publication, since June 2019 Nickel Digital Asset Management has delivered 29% returns with volatility of 3.5%. Cascades of liquidations across crypto derivatives in May neutralised the prior arbitrage opportunities.

Krachilov said the fund is adopting a wait-and-see stance, which is typical for investors in the crypto market.

According to him, Nickel Digital Asset Management’s clients are gradually shedding the notion that digital assets carry reputational risk.

Intertrust analysts forecasted an increase by 2026 to 7.2% of hedge funds’ net assets in cryptocurrencies (~$312 billion at the time of the study’s publication).

According to PwC’s latest report, 21% of ‘traditional’ hedge funds with $180 billion AUM have already invested in a new class of instruments, averaging 3% of assets, and most of them plan to grow this allocation.

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