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Record Q1 crypto volatility is ‘not a new normal’ — Nickel Digital

Funds managed by Brevan Howard, Pantera Capital, and Nickel Digital, among others, have exhibited significant gains despite crypto volatility's spikes.

Analysts from Nickel Digital working on crypto indices from an office in London.

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Nickel Digital Asset Management has cautioned investors not to expect a repeat of its Diversified Alpha fund’s exceptional first-quarter performance, which saw the $80 million vehicle return a net 11% amid heightened crypto volatility.

The fund, which aims to capitalize on market pricing inefficiencies, typically targets annual returns of 15%-20%, according to Chief Executive Officer Anatoly Crachilov. However, March’s unique combination of volatility, high trading volumes, and “high dispersion” propelled the fund’s gains to 5% for the month, as detailed in an investor presentation reviewed by Bloomberg.

“Unfortunately, this is not a new normal, we won’t make 5% every month going forwards,” shares David Fauchier, Diversified Alpha’s manager.

Fauchier emphasizes in the presentation that these favorable conditions are unlikely to persist. “Everything you could want in a quarter pretty much happened at some point during that quarter,” Fauchier claimed.

Nickel Digital is not alone in benefiting from the crypto market’s strong performance, with funds managed by Brevan Howard and Pantera Capital also posting significant gains. In the first quarter, Bitcoin surged 67%, outperforming most other asset classes.

Despite the fund’s impressive returns, Nickel Digital’s chief investment officer, Michael Hall, stressed the importance of managing investor expectations.

“We don’t want to overstep expectations,” Hall said in an interview. “We want to let them know that they can have negative months as well. That’s just being honest and straightforward.”

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