No, not on the streets of our towns, where shops prepare far too early for holiday sales.
For those unfamiliar with the theory, window dressing is the idea that portfolio managers sell their losing positions and buy more of their winners ahead of year-end reporting so they look like they’ve been making all the right moves.
However, one study published in 2014 in the Review of Financial Studies used actual mutual fund equity trading data from 1999 to 2010.
“We find that both abnormally high institutional buying and abnormally low institutional selling are associated with price inflation,” they wrote.
Basically, funds were increasing buys of their bigger stock positions up to near the year-end, but they stopped selling at an even higher rate.
“We do not find evidence of targeted trading with year-end sales; the decline in selling is not greater for stocks of which institutions hold large positions.
Edward Moya, senior market analyst at currency trading platform Oanda, expects fund managers will dump their winners to realize gains for the year.
“As inflation worries grow, that will actually become a negative for bitcoin, because what’s going to happen is you’re going to be approaching year-end and all of Wall Street wants to show that they are profitable in trading cryptos,” Moya said on Wednesday’s First Mover program on CoinDesk TV.
“Typically, when we have a major risk reversal on Wall Street, because bitcoin has been one of the most profitable trades out there, you’ll probably see some weakness.
If average trading sizes are rising as prices fall, then that may be an indication that large holders such as institutions are unloading.
The firm looked at the average daily trading sizes on eight exchanges since 2017 – Coinbase, Bitstamp, Kraken, Bitfinex, Gemini, Bitrex, ItBit and LMAX Digital – which are particularly popular with institutional traders.
Yet when using a weighted average, it appears average trading sizes have rebounded over the past couple of months.
And those who did well in the so-called altcoins may sell those instead and plow it back into crypto, according to Rich Rosenblum, co-founder and president of trading firm GSR.
“People are taking profits on their rolling it into bitcoin because bitcoin has been de-risked,” Rosenblum told “First Mover” this past Thursday.
There are just seven weeks left in the year, and it seems there’s no consensus on which will win out: the HODLers or the profit-takers.
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