Custody of digital assets is a key consideration for institutional investors and wealth managers when investing in crypto and digital assets
Opalesque Industry Update – New research from London-based Nickel Digital Asset Management (Nickel), Europe’s largest regulated and award-winning digital asset hedge fund manager, founded by senior traders and investment professionals formerly of major financial institutions including Goldman Sachs and JPMorgan, reveals concerns Security is the biggest hurdle preventing institutional investors and wealth managers from investing in crypto and digital assets.
A survey of institutional investors and wealth managers, who collectively manage approximately $108.4 billion in assets, found that 79% cite asset security as one of the top three reasons not to invest in cryptocurrencies and digital assets. This is followed by 67% who mentioned price volatility, 56% who mentioned market capitalization and 49% who mentioned the regulatory environment. Another 12% included the carbon footprint of Bitcoin and other cryptocurrencies in their top three reasons not to invest.
Gary Gensler, Chairman of the United States Securities and Exchange Commission, has called on Congress to give the agency more power to police cryptocurrency trading, lending and platforms and 76% of professional investors surveyed believe that it will be granted next year. If the SEC is granted these additional powers, 73% of institutional investors and wealth managers believe it will have a positive impact on the price of crypto and digital assets – 32% believe it will have a very positive effect.
Henry Howell, Head of Business Development at Nickel Digital, said: “Our research shows that institutional investors have correctly identified custody and security as a key differentiator for this unique asset class. At Nickel Digital, we’ve helped drive the innovation and institutional quality solutions that are paramount to the world’s largest investors. As a result, we are seeing more institutional investors investing in digital assets for the first time, and those who are already exposed are making new allocations.
Nickel Digital’s infrastructure is designed to provide various entry points to the crypto market. Nickel currently has four funds investing in the digital asset space. Its market-neutral digital asset arbitrage fund pursues an absolute return strategy without expressing directional views on the underlying crypto asset market. It exploits market inefficiencies and price dislocations, and exploits swings in volatility to generate consistent positive returns within a strictly defined risk management framework. The fund has had over 97% positive months since its inception over 2.5 years ago, with a volatility of 3.5% and a Sharpe of 3.7.
Diversified Alpha Fund is a non-directional, multi-strategy fund that brings together a portfolio of attractive but hard-to-access, capacity-constrained strategies into a single investable fund. Among the strategies he deploys are high frequency market making, statistical arbitrage, relative value, volatility arbitrage and trend following. The fund protected capital well at the time of distress in May 2021, delivering a record monthly performance of +4.7% despite the fact that the underlying market went through one of the strongest corrections in recent years. It works with volatility of 7.5% and Sharpe of 3.
DeFi Liquid Venture Fund is designed to capture the growth potential of the broader digital asset space outside of Bitcoin, spotting early winners in layer 1 protocols and decentralized finance, the area of greatest financial innovation. . The fund is an actively managed research vehicle aimed at identifying early winners and capturing the structural expansion of this space. Since its inception, it has outperformed bitcoin by a double-digit margin, highlighting greater innovation coming from the Defi space.
Nickel’s Digital Gold Institutional Fund, a bitcoin tracker, provides secure, efficient, transparent, and liquid access to physically allocated bitcoins. It offers institutional-grade trade execution accuracy, trades 7 days a week, and offers one of the lowest expense ratios in the industry.