Whales are the largest creatures in the oceans, and the cryptocurrency world is no different. The term refers to individuals or entities who own or hoard the most cryptocurrency.
A Bitcoin whale is a single wallet address that has more than 1000 BTC in it. People who own vast amounts of other cryptocurrencies, on the other hand, are referred to as "crypto whales."
Crypto whales are becoming increasingly common in the cryptocurrency world, particularly in relation to Bitcoin. A single Bitcoin whale pushed the price to a new high of US$20,000 per token in 2017. In addition, a user moved over US$1.1 billion in Bitcoin in October 2020, making it one of the largest Bitcoin transactions ever. While these occurrences aren't uncommon, it's worth noting that they've been more common in recent weeks.
Whales make money for themselves while influencing how other cryptocurrency traders trade. That is why it is critical to keep track of what these whales are doing.
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How do Whales use Cryptocurrency to their Advantage?
Normally, whales place a large sell order on the books that is lower than all other sell orders in the market. As a result of the price drop and panic chain response, the market becomes more volatile.
This will only stabilise when the whale withdraws their huge sell orders from the market after enough panic has been aroused. As a result, the price is now where the whales intended it to be, allowing them to amass additional coins at their targeted price. The next strategy is known as a "sale wall."
Because cryptocurrencies were created with more anonymity in mind, it's impossible to trace accounts to individual persons or organisations.
However, you may identify at least some of the people who own considerable quantities of various coins by looking at the blockchain data of those who have made their public addresses public. Some of these individuals are well-known Bitcoin whales.
Bitcoin's founder, Satoshi Nakamoto, is thought to own roughly 1 million bitcoins. The Winkelvoss twins, who were portrayed by Armie Hammer in the film The Social Network, formerly held 1% of all Bitcoin.
Large Bitcoin wallets are also reported to exist on exchanges like Huobi, Binance, and Bitfinex. Although the majority of this money belongs to their owners, shifting cash across crypto exchanges has little impact on the market.
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Why are Crypto Whales Important?
The value of cryptocurrencies is mostly driven by supply and demand. When a considerable fraction of a coin's quantity is kept out of circulation, the price of the coins that are still in circulation rises.
As a result, if a large number of coins are abruptly liquidated, their value will plummet. As a result, whales have the unique potential to effectively manipulate the cryptocurrency market to their advantage.
What if, for example, a whale wants to buy more coins at a lower cost? All they have to do now is begin selling a significant amount of their assets. This puts downward pressure on the market and is likely to result in a fire sale, increasing the coin's liquidity at a lower price. They can then just repurchase their coins, as well as others, for a lower cost.
They can then keep these coins and cut down on the supply. The value of the coins they have just purchased tends to climb when prices rise. This is a highly simplified depiction of how whales might influence the market, but it illustrates their power.
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Examples of Bitcoin Whales
Bitcoin is pseudonymous, which means that account holders' names are hidden from view, but the ledger keeps track of all addresses and transactions. As a result, we can make some educated guesses regarding the identity of some bitcoin whales. Here are some possible candidates.
Satoshi Nakamoto
Satoshi Nakamoto's enigma has yet to be satisfactorily explained, although the story has recently taken a few unexpected turns. Craig Wright, an Australian businessman who claimed to have designed the cryptocurrency with the help of his buddy Dave Kleiman, is a likely contender for the "genuine" Satoshi Nakamoto.
Kleiman's estate sued Wright in 2019 for half of his alleged 1.1 million bitcoins. The case's details are complicated, made the more so by Wright and Nakamoto's secrecy, but if Wright has 1 million bitcoin, he would undoubtedly be among the top three bitcoin whales.
Barry Silbert
Digital Currency Group's CEO and founder, Barry Silbert, has invested in over 75 bitcoin-related businesses. CoinDesk, a key source of bitcoin news, is also owned by Digital Currency Group.
Silbert was at the same US government auction as Draper, allegedly obtaining 48,000 bitcoins.
Tim Draper
Draper Fisher Jurvetson, Draper University, Draper Venture Network, Draper Associates, and Draper Goren Holm are all founded by Tim Draper, an American venture capitalist.
Baidu, Hotmail, Skype, Tesla, SpaceX, AngelList, Twitter, DocuSign, Coinbase, Robinhood, Ancestry.com, Twitch, and Cruise Automation are among Draper's investments. He was also an early bitcoin investor, purchasing 42,000 bitcoin for $6 apiece and holding them on the now-defunct Mt Gox exchange. Draper's entire holdings were lost after Mt Gox was hacked.
Draper gained notoriety in July 2014 after he bought about 30,000 bitcoins seized from the Silk Road marketplace website during a US Marshals Service auction. With his present holdings, he is among the top 15% of all bitcoin investors.
The Winklevoss Twins
Cameron and Tyler Winklevoss, who were notably portrayed by Armie Hammer in the film The Social Network, were early users, supporters, and apostles for bitcoin. They are said to have more than 100,000 bitcoin, placing them among the top three whales.
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Is it necessary to go Whale Watching?
The majority of individuals will say no. At the end of the day, it is in crypto whales' best interests for their coins to have a high value (the exception to this being if they are planning to completely withdraw from the market for some reason).
You'll be chasing your tail and wasting a lot of time if you jump on every bitcoin whale's wave. A better long-term strategy for detecting and avoiding whale manipulation is to keep a watch on the market in general and have an understanding of why things are moving the way they are.
Having a plan for when you want to exit the market or a minimum profit you want to make and sticking to it will avoid you from making impulsive mistakes in long-term investment. Setting a stop loss and sticking to it will provide the same level of safety for short-term crypto trading.
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Watch this: What Is a Bitcoin "Whales" and Why Investors Should Watch Them?
Whales are the world's largest mammals. And also, the crypto market's most powerful investors. Having a plan for when you want to exit the market or a minimum profit you want to make and sticking to it will avoid you from making impulsive mistakes in long-term investment. Setting a stop loss and sticking to it will provide the same level of safety for short-term crypto trading.
