$80 Million Crypto Fund Nickel Tapers Investors’ Expectations after Record Performance

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The opening three months of 2024 have been quite busy and significant for Bitcoin and the wider cryptocurrency market, as well as various crypto investment funds. Notably, Nickel Digital Asset Management achieved its finest quarterly results to date for its $80 million Diversified Alpha fund during this period.

According to Anatol Crachilov, CEO of Nickel’s fund, this investment vehicle is designed to capitalize on discrepancies in market pricing. Normally, it generates returns between 15-20% per year. Nevertheless, due to powerful market trends during the first quarter, the Diversified Alpha fund delivered an impressive 11% return.

During March, Nickel’s Diversified Alpha fund managed to achieve a return of 5%, despite heavy trading activity, market instability, and considerable price differences among assets (referred to as “high dispersion”). However, Nickel cautions investors that these exceptional returns are not the norm and should not be relied upon indefinitely. The fund also emphasized the significant risks involved, which could result in greater losses than anticipated.

During the presentation, David Fauchier, Diversified Alpha’s manager, said:

I’m sorry for any disappointment, but the 5% return we experienced monthly during the recent quarter isn’t something we can expect to continue regularly moving forward. The market conditions that allowed for such growth have shifted, and while there may be strong performances in certain quarters, it won’t be the norm moving ahead.

Crypto Funds Outperformed During Q1

Nickel isn’t the only crypto fund manager experiencing success in the recent quarter; Brevan Howard and Pantera Capital are also among those who have taken advantage of the bullish market to make significant profits. During this time, Bitcoin experienced an impressive 67% rise, outperforming most traditional asset classes, while the Bloomberg Galaxy Crypto Index saw a substantial increase of 57%.

Although numerous crypto hedge funds have achieved significant growth, Diversified Alpha’s outstanding results have sparked some apprehensions according to Nickel. Michael Hall, Nickel Digital’s CIO, expressed this concern in an interview.

“It’s important for us not to set unrealistic standards. We aim to communicate that even we experience downturns at times. This is simply a reflection of reality.”

In contrast, there has been a surge in crypto investment product inflows following the introduction of this year’s spot Bitcoin ETFs. These Bitcoin investment products have already attracted over $12.26 billion in new investments.

The forthcoming Bitcoin halving means fewer new coins will be mined, which could significantly reduce the circulating supply. If there’s continued strong demand for Bitcoin ETFs, this could further boost Bitcoin’s price.

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2024-04-19 18:33