U.K.-licensed Nickel Asset Management says it has raised $50 million for a fund aimed to make profits off the volatility of cryptocurrencies.
The firm said Monday it has now "soft closed" its Nickel Arbitrage Fund to new investors, two months after launch. The raise was joined by funds of funds and family offices in the U.K., Europe, North America and Singapore.
by the Financial Conduct Authority, the firm says the arbitrage fund strategy "harnesses the extreme swings in crypto markets to deliver low-volatility, consistent performance."
Nickel has built its own automated trading systems. By investing in only those digital assets that have active futures and swap markets, it maintains "an overall market-neutral exposure to volatile crypto-assets," according to a press release
“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.
Nickel also said it offers a solution for managing digital assets on multiple trading platforms.
"Until now, hedge funds have been using a self-custody model for digital assets. Since blockchain transactions are irreversible, the risk of a single point of failure has been the key reason for institutional investors avoiding exposure to the asset class at any significant scale," Nickel said. The firm is employing multi-signature security to ensure no single party can move funds individually, and restricts movement of funds to a pre-approved white list of addresses.
Anatoly Crachilov, Nickel Asset Management CEO, said:
“Our 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.”
Nickel said the fund may reopen to investors for a limited period later this year as its service reaches full capacity.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.