OI14: Behind the Scenes of a Crypto Hedge Fund ft. Michael Hall & Anatoly Crachlilov
Top Traders Unplugged
Intro
This chapter explores the founders' journey in establishing a significant crypto hedge fund, detailing their transition from traditional finance. It highlights key market events and the critical role of risk management in adapting to the volatile landscape of cryptocurrencies.
In this episode, Moritz Seibert speaks with Anatoly Crachilov and Michaell Hall from Nickel Digital, a prominent London-based crypto hedge fund. Anatoly (CEO) and Michael (CIO) founded the company in 2019 with an initial focus on in-house arbitrage and basis trading strategies. Over the years, their business model has evolved and adapted to the fast-changing world of digital assets. Today, Nickel Digital operates as a multi-strategy, multi-manager setup with more than $250 million in AUM, making it one of the largest and longest-standing crypto hedge funds globally.
Anatoly, Michael and Moritz speak about the opportunities and challenges of operating a multi-PM digital asset hedge fund, how they differ from traditional asset hedge fund pod shops, and how the attract and find new PMs to work with them.
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Episode TimeStamps:
02:13 - Introduction to Nickel Digital and how they found their way to crypto
08:10 - A trip down memory crypto lane
12:25 - Why is the basis still so wide on crypto?
15:07 - The state of alpha in the crypto space
18:23 - What kind of portfolio does Nickel Digital run?
19:56 - How they take advantage of automation to carry out a 24/7 365 trading strategy
22:24 - How they manage the managers
25:22 - How they approach netting cost
27:40 - Their process for paying managers
30:59 - Their manager onboarding process
38:41 - Why traders make more money at Nickel Digital than anywhere else
40:52 - What is the average sharpe ratio in the crypto space?
43:19 - The tech backbone - how Nickel Digital is connected to exchanges
46:08 - FTX collapse - The most stressful period for their business
49:46 - How they manage price and risk in 24 hours/day markets
54:06 - How crypto differ from regular markets
57:09 - The pitfalls of trading crypto
01:02:35 - What is their long term vision for Nickel Digital?
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