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Hedge fund manager Nickel Digital's crypto Arbitrage Fund outperforms the S&P 500 despite the crypto crisis

Thursday, May 26, 2022
Opalesque Industry Update - 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.

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%."

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