UAE digital asset investors to increase investment in altcoins

New research from Nickel Digital Asset Management (Nickel), Europe’s regulated investment manager dedicated to the digital assets market, reveals that institutional investors with exposure to Bitcoin in countries such as US, UK, France, Germany and UAE will increase investment in altcoins (a cryptocurrency other than Bitcoin).

The research surveyed investors and wealth managers from the US, UK, France, Germany and the UAE, who collectively have $275.5 billion in assets under management. Of those surveyed, 32 percent predict that professional investors with an allocation to Bitcoin will invest in altcoins for the first time over the next 12 months.

One in three (33%) believe they will dramatically increase their allocation, and 29% think they will do so slightly.

When asked why they believe professional investors are increasingly focusing on altcoins, 54% said it was because a range of cryptocurrencies have seen their market cap reaching meaningful thresholds and establishing leadership positions. This was followed by 45% who said it is because crypto assets are showing attractive diversification benefits from Bitcoin, and 44% who said it is because they believe upside potential of this market warrants a long-term portfolio allocation.

Anatoly Crachilov, co-Founder and CEO of Nickel Digital, commented, “Many DeFi protocols have seen their market cap increasing dramatically over the past year, with valuations rising faster than Bitcoin. These assets are addressing real life use cases and based on greater programmability than Bitcoin, which is reflected in their price dynamics. It is no surprise therefore that forward-looking institutional investors and wealth managers are increasingly paying attention this emerging part of 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 cryptoassets market. It exploits market inefficiencies and price dislocations and harnesses swings of volatility to deliver consistent positive returns within a strictly defined risk management framework. Since inception 27 months ago, the fund has delivered strong risk-adjusted returns with 96% positive months, volatility of 3.5% and Sharpe of 4. The fund is up +12.6% YTD.

Nickel also has the DeFi Liquid Venture Fund which is designed to capture the growth potential of the broader digital assets space outside Bitcoin, spotting early winners in Layer 1 protocols and Decentralised Finance, the area of greatest financial innovation. The fund is an actively managed research-driven vehicle aiming at identifying early winners and capturing structural expansion of this space. The portfolio was up over 30% in August 2021, reflecting the strong recovery of the underlying market.

In The fourth quarter of 2021 Nickel will launch the family of defensive funds,including Defensive Bitcoin and Defensive Ethereum funds, which aims to offer institutional-grade exposure to Bitcoin and Ether while managing downside volatility of such portfolios.