In cryptocurrency, whales are large investors with a large number of digital assets on their balance sheet compared to other holders.
Whales can influence events in the market. Determine price range, volatility, trend, supply/demand ratio. There are roughly 4 categories among them:
large institutional investors;
investors who bought large amounts of coins at an early stage of project development;
Whales in cryptocurrency are exposed on a tablet screen.Compared to the conventional market, whales can act as regulators such as central banks, governments dictating monetary policy in the financial sector. For this reason, the more the currency is dispersed among the participants, the more decentralised it is and the less influence individuals have. For this reason, in the case of Bitcoin and Ethereum, the actions of specific players and even large funds cannot determine global directions and trends.
Investors with less capital keep an eye on what the whales are doing in order to anticipate price movements and capitalise on them. Not everything can be tracked, as some of the transactions take place off-exchange.
Cryptocurrencies that lack any technical component and were issued as a joke are more vulnerable to whales. As an example, Dogecoin has almost 50% of all coins in 10 wallets. If they are put up for sale immediately, the price could collapse due to a dramatic change in the balance of supply and demand.
How they can influence the market
Due to the large amount of money they have, they can make big trades, which can drastically change the situation on the market. Placing orders above the average amount of money causes the price of the asset to change and opens the door to manipulation. In the stock market, this kind of action is prohibited and monitored by regulators. In the cryptocurrency market, there are no controls yet.
Despite frequent negative opinions about price manipulation in the whale markets, they are not primarily interested in destabilising the cryptocurrency market. This would lead to a depreciation of their assets as well as investors switching to other instruments.
The biggest whales
The 3 cryptocurrencies (Bitcoin, Ethereum, Tether) now dominate the market, accounting for around 70% of total capitalisation.
The top 10 Bitcoin wallets hold about 5% of all available coins. The owners of these addresses are major whales in the market. The top 100 richest wallets account for 14% of the total coins, which is a good decentralisation ratio. With this proportion, it is difficult for the big players to manipulate the market by dispersing assets. In Tether (USDT), the top 10 wallets hold about 30% of all assets. The opportunities for the whales are higher here. The ranking of the largest Bitcoin holders is shown below.The wallet addresses of the largest Bitcoin holders.
There are currently just under 40,000,000 addresses on the blockchain. Of these, only 1,000,000 are active.
How you can track activity
In order to identify a whale in the market, there are several ways to do so. The main one is to track the movement of transactions between wallets. Monitoring services are used for this purpose.
Large orders in the exchange stack can also indicate the presence of a whale. During the trading process, a large coin order appears and when a certain price is reached, the order is cancelled. This is how the whales move the price of the coin into the range they want, which is a good signal to other participants.
There are various services that allow you to monitor whale transactions such as bitstat.top. Bitcoin transactions can be watched on the following platforms.
Blockchain.info is one of the first services to provide information about transactions within the network. There are various charts and other statistical data about Bitcoin, allowing to track major market players.
Oxt.me is a website for tracking transactions on the blockchain. On the start page, you enter your wallet address and transaction data appears.
Blockchair.com is a blockchain monitoring service for popular cryptocurrencies (Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Bitcoin SV and Dogecoin) where you can view transaction details and print out a PDF check for it.
Not all transactions and wallet balances can be tracked publicly. It depends on the specific blockchain and its architecture. For example, cryptocurrencies such as Monero (XMR) and Verge (XVG) do not allow transfer tracking and have increased privacy. The level of dominance of such coins is not significant, which means that large holders will not be able to dramatically influence the overall market.
The Holders section on CoinMarketCap looks like this.The CoinMarketCap service has a Holders section that allows you to see information about the number of coins held by large wallets, as well as ratios, charts and other tools for investors and traders.
What tactics do whales use
One of the benefits of Whales is the impact on the ability to buy a coin in a certain price range. This is usually done by placing a large sell order at an undervalued price. The other traders, seeing this, will start selling their assets. Once the price approaches the right mark, the whale will buy back the coins at a reasonable price, removing the previously placed order before doing so. The whale wave opens up opportunities for new investors, allowing them to buy coins at a profit and then sell them at a higher price in a short period of time.
Pump and Dump. Used to artificially raise prices and capitalise on a short-term trend. Large buy orders are placed at inflated prices. Other bidders see this and start buying the coins, hoping for a quick rise. Once the price reaches a predetermined level, the manipulators quickly sell the assets and remove their overpriced orders. This is followed by a dump and a price correction to previous levels. In this strategy, the lost profits syndrome or FOMO is triggered. New and inexperienced investors try to invest as much as possible in a coin that is trending so as not to miss an opportunity. Such events are usually fuelled by news via various bloggers and social media groups with loud slogans. As a result, the coins bought at the peak of the price go down in value in a short time.
Wall-of-sale tactics are typical of promising projects that have the potential to grow in value. An important fact is the insider information, which is not available to ordinary users. Its essence is to procure as many tokens and coins as possible at a low price. To do this, the whales put up a large wall of sales, preventing quotations from moving upwards. Other holders of these assets, without seeing any positive momentum, try to sell it. After a certain period of time (not more than a few months), the price goes up sharply, enriching the whales.