What is a crypto whale?
When investing in crypto, it is wise to take crypto whales into account. Crypto whales own large amounts of crypto and can therefore easily influence the crypto market.
What are crypto whales?
The crypto market is relatively small compared to the stock market. This allows wealthy crypto investors to own a large portion of the market. Crypto whales are individuals or companies that own a large portion of a particular cryptocurrency.
On this website, you can see which wallets hold the largest portion of Bitcoins. The four largest wallets own about 3.5% of all Bitcoins, and the largest 100 wallets own about 12% of all Bitcoins.
With other cryptocurrencies, you can see that whales have an even larger percentage in their possession. For example, Dogecoin is even more decentralized, with a handful of people owning more than half of all cryptocurrency.
How can crypto whales influence the market?
Crypto whales are often institutional investors, such as crypto exchanges and hedge funds.
It is easy for a whale to influence the market. When they place an order for a large number of Bitcoin at once, this can immediately cause the price to rise or fall.
Crypto whales also influence the market by slowly building up orders. can slowly raise the price of a crypto.
Whales & liquidity
Whales can also be bad for liquidity on a market. When whales hold on to their crypto assets, it is more difficult to find sellers within the market. With too few available cryptocurrencies, it can then be difficult to match supply and demand.
Some investors engage in whale watching: they closely monitor the wallets of large crypto investors. For example, when it appears that a large whale is going to sell Bitcoins, it may be a good time to sell.
If you want to keep an eye on what whales are doing, you can look at exchange inflow. This is the average amount of a specific cryptocurrency that is deposited on an exchange. When this value exceeds 2.0, the chances of a strong market movement increase.
When a whale publicly announces that they are dumping a certain cryptocurrency, this can result in a further price drop. You often see that many private investors then sell their cryptocurrencies in panic.
Who are some well-known crypto whales?
- Satoshi Nakamoto – this must be the most mysterious whale, as his identity is still unknown. The founder of Bitcoin still owns 1 million Bitcoin, which would make him one of the richest people on earth.
- Michael Saylor – the CEO of MicroStrategy has invested more than $3 billion in Bitcoin.
- Tim Draper – this venture capitalist owns over 30,000 Bitcoin.
- The Winklevoss Twins – these twins are known as co-founders of Facebook and have invested over $1 billion in Bitcoin.
- Vitalik Buterin – this co-founder has invested a large part of his fortune in cryptocurrencies.
Conclusion: are crypto whales dangerous?
Crypto whales can have a lot of influence on the crypto market. However, crypto whales are not necessarily dangerous: many whales believe in the future of crypto themselves and have invested a lot of money in the blockchain. Nevertheless, as an active investor, it can be wise to keep an eye on the actions and words of crypto whales.