UK firm launches a fund to capitalize on crypto’s volatility

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As the old saying goes, when life hands you lemons, make lemonade. That’s the mantra of a UK-based company that has developed a fund that plays against the volatility of the cryptocurrency markets. Nickel Asset Management launched the fund two months ago and has now raised $50 million in investment money to make it possible. 

Nickel is licensed and regulated by the Financial Conduct Authority (FSA) in the U.K. and its Nickel Arbitrage Fund attracted investments from funds of clients across the globe, including in the U.K, North America, Europe and Singapore. The fund “harnesses the extreme swings in crypto markets to deliver low-volatility, consistent performance,” according to Nickel.

Using proprietary and automated trading systems, Nickel invests in digital assets that offer swap markets and active futures while maintaining “an overall market-neutral exposure to volatile crypto-assets.” The firm asserts that it will be able to operate as a full-scope alternative investment fund manager and can cover over $100 million in assets from institutional investors.

The fund, among other things, will be able to exploit price discrepancies between exchanges, known as arbitrage. This involves the purchase of an asset on one exchange and then selling it on another where the price is higher in order to profit from the difference. Nickel portfolio manager Alex Kloda adds, “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.”

Nickel fully expects digital assets to soon become an integral part of any institutional investor’s portfolio. This is most likely going to be true, given the increased interest in crypto investments on an institutional level as evidenced by the introduction of futures trading platforms such as Bakkt and the increased push for exchange-traded funds around the world.

The CEO of Nickel, Anatoly Chrachilov, explains that the company’s 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.”