Anatoly Crachilov, formerly of Goldman Sachs Investment Management and JP Morgan, co-founded Nickel Digital in 2019 to focus exclusively on digital assets. Nickel’s strategies have been regularly recognised by SFN’s performance awards, and the three founders have also featured on the front cover of our publication.
Mainstream
Sixteen years after bitcoin was born in 2009, digital assets are moving into the mainstream.
The physical bitcoin ETFs launched by BlackRock in January 2024 saw USD 20 billion of inflows over the first 60 days, thus becoming the most successful ETF launch ever across more than 11,000 ETFs launched in the market’s 30-year history. It subsequently hit the USD 100 billion mark in less than 2 years since launch, another absolute record.
Overall, by mid-2025, crypto ETFs saw inflows from 900 institutions, including Citadel, Goldman Sachs and Morgan Stanley, as revealed by the recent US regulatory 13F filings.
Crypto has historically been treated with suspicion by investors, largely due to the lack of a regulatory framework, unproven use cases, and hence potential career risk for many allocators to engage. “We are approaching the inflection point, with some major regulatory changes coming out of the US,” says Crachilov.
US legislation and regulation, including the Genius Act and the Clarity Act, are changing dynamics, resolving previous turf wars between the SEC and CFTC, and eliminating anti-crypto stance by regulators. Institutional investors are now gradually overtaking retail participation, following the playbook seen in US equities since the 1940s.
Unique features and infrastructure for digital assets
Digital assets offer a range of unique features that appeal to systematic traders. “Digital assets are a 24/7 market, offering an uninterrupted price discovery 168 hours a week, some 5 times (!) higher than the 32.5 hours that the US cash equity markets are formally trading. This means they can capture diverse market events, including geopolitical shocks or OPEC oil meetings over the weekend,” says Crachilov.
“The 24/7 structure of the market forces the trading to move into the systematic space as discretionary traders cannot work around the clock,” says Crachilov.
“Volatility is higher since there are no circuit breakers artificially constraining price moves, and funding rates and basis (between cash and futures) can sometimes spike up to annualised rates of 30% or more,” he adds.
Fragmented and decentralised liquidity across over 200 exchanges creates inefficiencies and mispricing, opening up arbitrage and relative value opportunities, whereas price discovery in traditional finance tends to be concentrated into a single venue, such as the Nasdaq for most tech stocks.
All this demands dedicated infrastructure and technology for 24/7 risk management, and managing operational routines such as near-instantaneous settlements between trading venues and custodians every 4 hours (or sometimes every 2 hours), i.e. much faster than T+1 settlement recently introduced for US and Canadian equities.
Custody and security
Digital assets also require different service provider structures such as cold wallet custody for off-exchange settlement. While retail investors often continue to take on counterparty risks, in a post-FTX world, institutional traders enforced an off-exchange settlement model, with 95-98% of Nickel’s capital now held in off-exchange and triparty solutions, severely mitigating counterparty risk.
Additional elaborate security safeguards against hacks have been devised. The investment manager, custodian and administrator can each hold a cryptographically-protected share of the private key, with multiple signatures required to authorise transfers, leveraging Shamir’s Secret Sharing Scheme, created by Israeli cryptographer Ali Shamir.
Multi-strategy in digital assets
Nickel always believed that in a fast-paced crypto market, a multi-strategy multi-manager concept would serve LPs’ investment objectives better than a single-manager model (which inevitably pursues a narrow range of strategies). That thesis underpins the multi-manager model implemented by Nickel with a range of strategies comprising relative value, statistical arbitrage, short-term mean reversion, cross product arbitrage, future basis and cross exchange funding arbitrage, HTF market making and short-term trend CTA. Most of these concepts borrow from the traditional hedge fund playbook but have been adapted to the higher-octane world of digital markets, with machine learning widely used across various strategies devised by the trading teams. “Correlation heatmaps amongst strategies are closely monitored to minimise inter-pod correlations and maintain strong diversification. The portfolio of strategies has been stress tested during crypto flash crashes such as around Yenmaggedon in August 2024, when bitcoin dropped 22% overnight,” says Crachilov. It was tested again in the infamous October 10, 2025, flash crash (driven by President Trump’s 100% tariff announcement) after which Nickel emailed a client flash alert confirming their risk management system performed as expected, protecting capital and took advantage of the event, delivering one of the strongest daily performances.
A very different pod shop model
Nickel has 74 pods located in 36 cities across 22 countries as of September 2025 and has, since inception, provided test allocation to over 150 pods, selected after reviewing 1,600 systematic teams. “Since all pods are external by design (hence no non-competes or sit-outs), they can hit the ground running in 2-3 weeks rather than in 12-18 months. All new managers must prove their expertise, however, with a ‘sub-million test allocation‘ for the first 2-3 months. This allows Nickel to gather a statistically significant time series of actual trades to gain a well-informed view of the strategy’s performance. The pods can eventually be upsized up to USD 50 million once Nickel gains statistical confidence,” says Crachilov.
Conversely, Nickel will cut down exposure if pods hit any of the strictly defined risk metrics, including PTT drawdown, beta, gross and net exposure, or managers may choose to voluntarily return capital if the market hits a rough patch or there are constrained market activities. “We recognise capacity constraints in some strategies,” says Crachilov, as Nickel’s aggregate trading volumes exceeded USD 100 billion last year.
Pods receive no sign-on bonuses or management fees but are eligible for performance fees of 30% or higher paid quarterly, partly based on a Sortino matrix penalising downside (but not upside) volatility. There is also a deferral mechanism buffer to (partly) absorb any potential future drawdowns.
“To avoid any conflicts of interest, we do not run competing strategy internally and legally undertake to protect pods’ IP and not to copy trades or reverse engineer external managers’ strategies,” says Crachilov.
Assiduous risk management
Nickel does oversee risk management, as external managers are subject to various risk limits. “Positions might be proactively reduced or cut altogether in cases of limit breaches, and allocations may be scaled back if inter-pod correlations increase,” confirms Crachilov.
Nickel is connected to 12 exchanges and processes over 100 million portfolio data points every 24 hours, using a real-time in-house execution management system and risk management system (RiskZeus) to oversee portfolio movements on a tick-by-tick basis. More than 15 engineers have spent 6 years building and optimising RiskZeus.
Nickel is authorised by the UK FCA and registered with the US CFTC. “We view regulation as an accelerator of industry adoption. Even borderless assets demand political tailwinds,” points out Crachilov.
Outlook for crypto
Innovation continues with DeFi and tokenisation, which could change the structure and fabric of financial markets, and is now widely supported by erstwhile crypto sceptic Larry Fink of BlackRock.
Nickel declined to provide a bitcoin price forecast, but it is broadly constructive long term, thanks to increasing regulatory clarity, adoption of institutional-grade custody solutions, anticipated capital inflows into a limited supply, and politically-neutral digital assets such as bitcoin, driven by inevitable fiat currency debasement.
There is speculation that quantum computing poses a security risk for bitcoin. “We acknowledge that some earlier wallets using weaker cryptography could be vulnerable to quantum attack unless preemptively upgraded, but the latest wallets are based on more advanced cryptography and are much harder to crack. We also envisage that future upgrades will exponentially increase the cryptographic complexity behind bitcoin protocol, thus requiring an astronomical timeframe to break the code, even with expected advancements of quantum computing. An industry as agile as digital assets should be able to adopt to the advancing technology landscape,” concludes Crachilov.
