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Bitcoin Specific-Fund Is Latest to Tout the Digital Gold Narrative

Bloomberg logoBloomberg 4 days ago Olga Kharif

(Bloomberg) -- Nickel Digital Asset Management, which runs a $50 million fund focused on cryptocurrency arbitrage, is launching a Bitcoin specific one targeting accredited investors.

The London-based money manager expects to have $1 billion in the fund, called Digital Gold Institutional, within 18 months, Chief Executive Officer Anatoly Crachilov said in a phone interview. It’s starting the fund with money from family offices and high net-worth individuals. Subscriptions will become available from the end of January, with minimum investment of $1 million.

Nickel is the latest entrant into Bitcoin-focused funds that draw comparisons to gold and its historical role as a storage of wealth and a hedge against uncertainty in other asset classes. Grayscale Investments Inc., which has $2.1 billion under management, has a Bitcoin only fund. In November, Mike Novogratz’s Galaxy Digital Holdings Ltd. announced two Bitcoin trusts for accredited and institutional investors. Nickel is seeking to charge lower fees than Grayscale and to let investors redeem any day, Crachilov said.

“We can see this demand for our first fund, so it’s the right inflection point for the market to see this flow of substantial institutional capital,” Crachilov said. “People are willing to go into it.”

a screenshot of a video game: Gold holds steady as Bitcoin swings wildly© Bloomberg Gold holds steady as Bitcoin swings wildly

While other coins declined or barely increased in value last year, Bitcoin -- the world’s largest cryptocurrency -- appreciated 95%, beating most more traditional investments. While it’s possible to invest in Bitcoin directly, investing through a fund can help with purchasing large swaths of coins at market prices, and with safekeeping of the tokens.

Fidelity Digital Assets Ltd. will be the fund’s principal custodian, supported by prime brokerage services by Copper. Trident Trust will be the fund’s administrator, and KPMG its auditor.

Authorized by the U.K.’s Financial Conduct Authority, Nickel was started last year by three founding partners, who previously worked at Goldman Sachs Group Inc., JPMorgan Chase & Co. and Deutsche Bank AG. Clients for its first fund include three funds of funds, eight family offices, and ultra high net worth individuals, Crachilov said.

“We are seeing growing comfort and interest from European institutional investors in digital assets, driven by a search for sources of uncorrelated absolute returns,” said David Fauchier, CIO at investor Cambrial Capital, a fund of funds specialized in crypto arbitrage strategies. “Nickel’s latest offering creates a secure institutional-grade gateway to access this market.”

Read More: ‘Magic Internet Money’ May Be Too Volatile to Attain Gold Status

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