Key Takeaways
- • Nikita Fadeev, who heads Fasanara Digital, the crypto arm of London-based quant hedge fund Fasanara Capital, told the QuantStrats conference in London that quant funds must be "quantitative, systematic, and logical" in digital asset trading.
- • Fasanara launched one of the first market-neutral funds exclusively focused on digital assets in 2018 as a joint venture with Fasanara Capital, with a deliberately long-term approach.
- • Fasanara's strategy has shifted from high-frequency trading a few years ago to a system now trading on more than ten exchanges and rotating the fund 10 to 15 times a day.
- • Fadeev said the fund was highly exposed to the FTX collapse in 2022 as one of the largest liquidity providers, despite risk controls in place.
- • Fadeev argued crypto is "complicated but not really complex," with lower barriers to entry than traditional finance but many small operational details to manage.
Summary
Nikita Fadeev, managing partner and head of Fasanara Digital, outlined the approach of quantitative digital asset trading at the QuantStrats conference in London, according to a report by Disruption Banking. Fadeev, who was featured on the Forbes 30 Under 30 finance list in 2021, discovered Bitcoin in 2016 and in 2018 launched a joint venture with Fasanara Capital, the London-based quant hedge fund, to run one of the first market-neutral funds focused exclusively on digital assets.
Fadeev said the fund was built for a long horizon, noting that the typical hedge fund lifetime is two or three years. Central to the strategy was what he called "a quantifiable edge", meaning mathematical models that explain why the fund makes or loses money. He stressed that early gains needed statistical validation to rule out luck. "It could just be explained by randomness," he said, adding that "the work has to be quantitative, systematic, and logical."
The strategy has evolved over several years. Fadeev said that three years earlier the fund focused on high-frequency trading, rebalancing once or twice a day across roughly 10,000 trades on millisecond horizons. Today, he said, the fund trades on more than ten exchanges, sends millions of orders daily, and rotates its portfolio 10 to 15 times a day.
Fadeev argued that crypto is "complicated but not really complex" compared with traditional finance, where a single solved model can yield lasting alpha. In crypto, he said, success depends on managing hundreds of small operational tasks under constraints of time and resources.
The report noted that the market turbulence of 2022, including the collapse of the Terra stablecoin, Three Arrows Capital and FTX, affected the sector. Fadeev said Fasanara was highly exposed to the FTX shock as one of the largest liquidity providers in the market, and that despite its risk controls the firm was worried about the future of the industry. He said that outcome could not have been foreseen, adding that "the aim of this game is to survive and strive."
Fadeev said the fund was built for a long horizon, noting that the typical hedge fund lifetime is two or three years. Central to the strategy was what he called "a quantifiable edge", meaning mathematical models that explain why the fund makes or loses money. He stressed that early gains needed statistical validation to rule out luck. "It could just be explained by randomness," he said, adding that "the work has to be quantitative, systematic, and logical."
The strategy has evolved over several years. Fadeev said that three years earlier the fund focused on high-frequency trading, rebalancing once or twice a day across roughly 10,000 trades on millisecond horizons. Today, he said, the fund trades on more than ten exchanges, sends millions of orders daily, and rotates its portfolio 10 to 15 times a day.
Fadeev argued that crypto is "complicated but not really complex" compared with traditional finance, where a single solved model can yield lasting alpha. In crypto, he said, success depends on managing hundreds of small operational tasks under constraints of time and resources.
The report noted that the market turbulence of 2022, including the collapse of the Terra stablecoin, Three Arrows Capital and FTX, affected the sector. Fadeev said Fasanara was highly exposed to the FTX shock as one of the largest liquidity providers in the market, and that despite its risk controls the firm was worried about the future of the industry. He said that outcome could not have been foreseen, adding that "the aim of this game is to survive and strive."
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