Time Weighted Average Price (TWAP)

Typically whenever a large firm, market maker or other similar entity has a large amount of an asset they’re selling off (for whatever reason), they’ll do it using a TWAP calculation.

This is basically an automated algorithmic trading strategy firms use to exit positions without creating too much price volatility (and thus, losing profits). Haven’t seen many (or any) entities in this space mention this before, so figured I’d drop it here so you all know.

In essence (not saying this applies here, but in general) whenever we see reports that a firm or entity is going to be liquidating a major position, they do it using the TWAP (or a similar strategy). They don’t just hit the “market sell” button and say fuck it lol. Not saying that never happens but … it’s always good to derive a rational basis behind an actor’s decision(s) in the market if we’re going to cultivate theories for XYZ.

This is just an FYI post.