London-based hedge fund manager Nickel Asset Management has officially launched an actively managed crypto investment fund that is geared towards experienced investors who are looking to capitalize from volatility in the cryptocurrency markets.
Dubbed ‘Nickel Arbitrage Fund,’ the new vehicle has raised $50 million from funds of funds and family offices in the UK, Europe, North America, and Singapore.
Nickel also explained that the new fund would also exploit arbitrage opportunities in order to secure regular gains for investors. The fund will invest in a portfolio of various digital assets using its own automated trading systems, as well as taking advantage of arbitrage.
When it comes to financial market spaces, Arbitrage involves buying an asset on one exchange and selling it on another where the price is higher to produce a profit from the value differential found on these two exchanges. The Cayman-based fund will employ its parent’s investing techniques including triangular arbitrage, futures basis trades, swap trading and volatility arbitrage, all benefitting from price displacements.
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Actively-managed crypto funds emerge
“As long as digital assets and their derivatives trade on multiple exchanges across the globe, with sufficient speed and execution quality, we can profitably make markets, while improving liquidity for other market participants,” said Alek Kloda, portfolio manager at Nickel.
The huge market for cryptocurrencies is largely unregulated, and digital assets have been used for all manner of illicit activities, which has deterred regulated financial firms from entering the market.
The firm’s founders believe that most vehicles for investing in cryptocurrencies are outside the scope of regulators, and that’s a big problem in a market that has such a bad reputation.
Nickel Asset Management CEO Anatoly Crachilov explains that their vision “is that it’s simply a matter of time until digital assets become part of institutional portfolio allocation for forward-looking investors around the world, and we aim to build an institutional-quality gateway to this high-octane world of digital assets.”