The crypto market’s October convulsion, the largest mass liquidation in the history of digital assets, offered a rare real-time audit of risk controls across the sector. By that measure, Nickel Digital Asset Management, a London-based multi-manager specialist, emerged with its credentials strengthened.
Yet the episode also highlights how dependent even the most sophisticated platforms remain on the fragile plumbing of an immature asset class.
Roughly $20bn of leveraged crypto positions evaporated within hours after threats of fresh US tariffs on Chinese imports triggered a wave of de-risking. With equity markets closed, crypto became the sole avenue for investors seeking to cut exposure, turning it into a pressure valve for global sentiment.
Bitcoin slid 9 per cent, Ethereum 12 per cent, while some altcoins — UNI and AAVE among them — collapsed by more than half. Compared with the $2bn in liquidations during the FTX implosion, the scale was unprecedented.
Unscheduled risk management test
For Nickel, which runs a multi-manager platform allocating to more than 75 pod managers, the chaos amounted to an unscheduled stress test of its proprietary risk-management system. The platform logged a ten-fold jump in trading activity as managers scrambled to exploit dislocations across spot, derivatives and funding markets. More than $2bn in orders were executed across various pods, the busiest trading day in the firm’s history.
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Nickel’s central investment team, two portfolio managers supported by analysts, convened an impromptu cross-functional task force late on a Friday evening as alerts fired across the system. Real-time oversight was tightened, exposures were cross-checked with pod managers and capital was steered toward strategies displaying stability rather than heroics. In a market accustomed to slogans about “24/7 trading,” the firm’s ability to enforce genuine 24/7 governance was notable.
The results were respectable. Nickel’s Diversified Alpha Fund, designed to deliver uncorrelated, non-directional returns, ended the month up 1.5 per cent net, according to BarclayHedge. That performance came as major crypto benchmarks fell and several altcoins plunged 50 to 70 per cent. Over the past year, the fund’s volatility has hovered around 6 per cent, also according to BarclayHedge, low by industry standards, though achieved in an asset class where liquidity can evaporate quickly.
Multi-manager structure brings complexity
Nickel touts its architecture as a way to harvest specialised alpha while avoiding the directional whiplash that defines much of crypto trading. A multi-manager structure, however, introduces its own complexities: allocators must trust not only the individual pods but also the oversight layer that binds them. Episodes like October’s are therefore revealing. Nickel’s leadership argues that discipline during quiet periods, rather than reflexes during crises, is what delivers resilience when volatility strikes. The evidence from this episode broadly supports that claim.
Still, the industry’s broader challenge persists. Even the best-designed risk systems cannot eliminate the structural vulnerabilities of digital-asset markets: fragmented liquidity, leverage that can unwind faster than models expect, and price action that often reflects macro spillovers rather than underlying network fundamentals. Nickel’s ability to navigate these fragilities speaks to operational maturity rather than systemic robustness.
For institutional allocators seeking exposure to the space without embracing its full drama, Nickel’s showing will be welcome. But as crypto markets continue to serve as a global shock absorber, reacting instantly to geopolitical tremors while traditional markets sleep, risk managers will need to prove not just that they can survive the next liquidation cascade, but that the architecture of the asset class itself is becoming sturdier. On that front, October offered more reassurance about Nickel than about crypto.
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