The financial market is a dynamic environment that goes through ups and downs in cycles. The…
What is a crypto whale? For beginners, this is a very curious word.
Whales belong to the ocean. They are the friendly giants of the deep waters. But now, there are whales even in the crypto space.
We all know that some cryptocurrencies have already announced their production limit. Bitcoin will produce only 21 million coins. Next, Binance set its supply at 200,000,000. Cardano will provide only 45 million coins, and 33 million ADAs are already in the market.
Also, Ripple’s currency, XRP, limits their coins to an estimated 100 million. Lastly, AVAX belonging to Avalanche, caps its native coin to only 720 million.
These production limits are essential to protect cryptocurrency against inflation. Furthermore, knowing each coin’s pre-determined supply helps in knowing which people or companies hold the largest number of cryptocurrencies.
Now, let’s dive into crypto whales and the role they play in the cryptocurrency market.
What Is a Crypto Whale? Definition and Meaning
Binance defines a crypto whale as a person or group of people who possess a vast number of crypto coins. The large amount of the specific cryptocurrency they hold is significant because this gives them the power to influence the market movement.
Once a big portion of a crypto company’s coins is already taken from the circulation, this drastically increases the price. In the same principle, if a huge amount of coins become liquidated, the coin’s price sharply drops. Cryptocurrency whales can do both.
The presence of whale manipulation is felt in the sudden crashes or surges of a crypto coin. They further contribute to the unstable crypto environment.
For instance, 2,000 different wallet addresses keep 40% of all BTC currently existing. These wallets belong to the BTC whales. However, the alleged biggest Bitcoin whale is Satoshi Nakamoto. Some experts speculate that he mined more or less a million bitcoins.
What Are Crypto Whales Capable of?
Crypto Whales hold such a huge sway over the activity that takes place in the crypto markets.
One of the best examples is Shiba Inu. SHIB’s price dramatically skyrocketed between October and November 2021. It even reached more than US$20 billion for its market cap last year. But a report released by Into the Block, a crypto research firm, revealed that eight whales could be the cause for SHIB’s price takeoff.
Furthermore, the study showed that 70.52% of Shiba Inu’s currency is held by the said eight whales, with one of them owning 41.03%. This case shows how powerful crypto whale’s financial decisions are.
While making huge gains for themselves, these whales are also able to impact how other investors deal with their respective cryptocurrency investments.
They have two tricks up their sleeve: sell wall and buy wall.
Read about the most popular cryptocurrencies for 2022.
Sell wall happens when a crypto whale makes an order for large amounts of cryptocurrency. This large sell order forces the prices to depreciate. People who are selling their coins at the time that a crypto whale places a sell order will have no choice but to significantly reduce their prices too.
Once the coin’s value is uniformly low throughout the network, the crypto whales can now purchase a large number of crypto coins at a very cheap price. They withdraw their sell order and repurchase the coin at a bargain. This action grants them more power in the network.
On the other hand, the opposite of the sell wall is the buy wall. This is when they pump up market prices. They make buy orders with a price higher than the market’s.
This big price hike triggers the Fear of Missing Out (FOMO) among other investors. High prices cause people to be interested in the crypto coin. They see it as a profitable deal.
Subsequently, this frenzy over buying the coins creates immense revenues for the crypto whales. They remove their buy orders and then keep their crypto assets. Their investments amass a bigger value than before.
Sell wall and buy wall are both illegal in the traditional finance sector. However, since cryptocurrencies operate on the blockchain, their identities and personal information are difficult to trace.
It can seem like the manipulation of crypto whales rests on the simple act of buying and selling. But it takes a significant amount of capital and strategic thinking to pull off moves like this when investing in cryptocurrencies.
The Biggest Crypto Whales
He is the executive chairman and co-founder of MicroStrategy. Saylor owns more than 17,700 BTC. An estimated figure of £478 billion is believed to be the current value of his personal Bitcoin stash.
His role as executive chairman of MicroStrategy was on procuring more cryptocurrencies. In fact, the company bought around $1 billion worth of btcs in 2021.
Tim Draper is a popular venture capital investor. In 2014, he bought around 29,656 bitcoin priced at $632 each during a United States Marshals Service auction. Now, those bitcoins have a value of £810 million.
Draper has a history with Mt. Gox where he lost all of his cryptocurrency but he made a comeback with his investments from the confiscated Silk Road Darknet BTCs.
Barry, Digital Currency Group founder, and CEO, owns a $28 billion (£20.6 billion) asset portfolio that includes Ethereum and Bitcoin. He started with crypto investments way back in 2012.
His company has investments with crypto start-ups in over 15 countries. As of June 2022, Silbert’s net worth is around $3.2 billion.
What Is Whale Watching?
Whale Watching means tracking a crypto whale’s activities. This helps other investors plan their next moves and protect themselves from losses that may arise from the decisions of crypto whales.
You can track whales using apps or websites such as WhaleAlert. They can help you monitor the wallet addresses of whales, analyze order books and observe the general situation in the market.
Summary on Crypto Whales
It is not advisable to always keep an eye on crypto whales. Chasing after every movement made by a cryptocurrency whale will make you overwhelmed and confused. Focus on the market and formulate your long-term plan on how to counter the extensive effects of the whales’ decisions.
Avoid panicking if you see prices dipping or soaring. Stick to the plan you made and always remember your goal. You can use whale tracking as a guide to help you set your course. But, don’t allow it to take over all of your financial choices.
When done properly and with a positive outlook, following crypto whales’ market behavior can help you spot opportunities for growing your profits and earning more.
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