U.K.-based hedge fund manager Nickel Asset Management has launched a crypto investment fund, Nickel Arbitrage Fund. The firm has thus raised a whopping $50 million for it.
The new investment fund has already won the stamp of approval from UK regulators, FCA earlier this year. The regulators will allow the firm to manage over $100 million in assets and target institutional investors. Investing strategies will include triangular arbitrage, futures basis trades, swap trading, and volatility arbitrage. The new fund will exploit arbitrage opportunities for securing regular gains for investors. In arbitrage opportunities, traders buy an asset on one exchange and sell it on another at a higher price. They thus gain a profit from the price difference. The new fund will exploit volatility and pricing inefficiencies in digital assets to drive returns. It will leverage the extreme swings in crypto to deliver low volatility performance.
The huge market for cryptocurrencies is largely unregulated and digital assets have been used for all illegal activities. This has thus deterred regulated financial firms from entering the market. Nickel Asset Management CEO Anatoly Crachilov believes that it will take a little time until digital assets become part of institutional portfolio allocation for investors globally. They are aiming to build an institutional-quality gateway to this high-octane world of digital assets as per the source.