$200 million hedge fund suspends crypto arbitrage trading during market downturn

After the crash of the crypto market in May, the crypto hedge fund Nickel Digital Asset Management switched to a cash position.

According to Bloomberg, a $200 million crypto hedge fund led by JPMorgan Chase and Goldman Sachs alumni Redeploy Its capital expects another explosive price run for cryptocurrencies.

Before entering the cash position, Nickel Digital focused on cryptocurrency arbitrage opportunities caused by the difference in cryptocurrency prices between the spot and derivatives markets.

In fact, it is reported that crypto arbitrage trading provides institutional investors with sufficient capital with double-digit annualized returns, and these temporary price gaps can be used to obtain substantial returns. These transactions are market neutral, not directional, because the focus is on price differences rather than price behavior.

Anatoly Crachilov, CEO of Nickel Digital, told Bloomberg when commenting on the fund’s investment paper: “We do not make targeted bets, so no matter whether Bitcoin rises by 300% or falls by 70%, we will seek to capture arbitrage opportunities from market dislocations. “Added:

“Our market-neutral, low-volatility strategy is designed to provide positive returns regardless of the direction of the market. This means making it easier for investors with lower risk tolerance to transition to the cryptocurrency market.”

According to reports, Nickel Digital achieved a gain of 29% with a volatility of 3%, which is far below the market average of 78% of crypto assets. However, Bitcoin’s (Bitcoin) The plunge in April and the subsequent capitulation of altcoins in May reportedly disrupted the arbitrage opportunities of hedge funds such as Nickel Digital.

50% of Bitcoin Plunging from an all-time high of $64,000 It triggered a series of liquidation in the futures market, especially for over-leveraged longs of approximately US$9 billion.Altcoins also plummeted by more than 70%, and the price trend is still in a state of horizontal accumulation Frequently drop by 10% to 15%.

related: “Bitcoin will soar all the way to $160,000 this year,” said Celsius CEO

For Krachilov, everything is waiting for the game now: “People will remember that June is a month of cash and wait and see.” The CEO of Nickel Digital also said that for investors who have been engaged in the cryptocurrency business for a long time In terms of the current market downturn, it is not unusual.

The head of the crypto hedge fund said that institutional investors are beginning to no longer regard crypto investment as a reputational risk.In fact, U.S. and European banks are beginning to provide Direct exposure to Bitcoin For retail and big money players.

As early as June, Alex Mashinsky, CEO of Celsius, a crypto lending platform, told Cointelegraph that he saw Bitcoin hits an all-time high of $160,000 Before the end of the year.