Here's How Whales Cause Huge Bitcoin Price Swings (2024)

FAQs

Here's How Whales Cause Huge Bitcoin Price Swings? ›

When a whale decides to buy or sell a significant portion of their holdings, the market reacts accordingly, leading to price volatility. For example, if a whale sells a substantial amount of Bitcoin, it can lead to a drop in the price of Bitcoin, as the increased supply in the market exceeds demand.

If a large amount of a cryptocurrency is held by a small number of whales and is not being actively traded, it may reduce the liquidity of that cryptocurrency. This can make it more difficult for other traders to buy or sell the cryptocurrency without causing significant price movements.

Addresses holding 10-100 BTC held the largest share of the BTC supply until March 2019, after which Bitcoin whales (minimum 1,000 BTC) increased in population. The supply held by the whales (1,000 BTC-10,000 BTC) peaked in January 2021, with the total share reaching 30%.

Whales impact prices by significantly increasing price volatility, especially through large transactions. When a whale moves a substantial amount of cryptocurrency in a single transaction, it can create downward pressure on the price.

Bitcoin has attracted the attention of retail and institutional investors, increasing demand fueled by increased media coverage, investing "experts," and business owners touting the value a bitcoin has and will have.

Whales can also influence market direction by placing large sell or buy limit orders at a specific price level, creating sell/buy walls. This tactic can prompt other traders to adjust their orders, affecting the asset's price.

As of March 2023, the top 1% of Bitcoin addresses hold over 90% of the total Bitcoin supply, according to Bitinfocharts.

MicroStrategy at the Top

As the world's largest corporate owner of bitcoin, MicroStrategy holds 174,530 bitcoin valued at an estimated $9.1 billion as of February 22, 2024.

How to monitor Bitcoin whales? ›

Whale activity on exchanges and trading platforms

Cryptocurrency exchanges like Binance and Coinbase provide access to live order book data and trading volume metrics. These tools allow users to track whale activity and behavior, and enable them to potentially make more informed trading decisions.

Whales often store a significant portion of their cryptocurrency holdings in offline wallets, also known as cold wallets or hardware wallets. These wallets are not connected to the internet, which reduces the risk of hacking or unauthorized access.

Bitcoin whales are individuals or entities holding large amounts of the digital currency and have the potential to impact price movements with a single trade. The widely accepted minimum threshold for a bitcoin whale is 1,000 BTC.

If this pattern continues into 2030, the price could peak around 2029 or 2030, potentially aligning with Wood's price prediction. If Wood is correct and Bitcoin reaches $3.8 million, a $100 investment in Bitcoin today would be worth $5,510 in 2030. This translates to a compounded annual growth rate (CAGR) of over 95%.

It is possible, but unlikely, for Bitcoin to go to zero. Like any other asset or investment, the value of Bitcoin is subject to market forces. It can be affected by various factors, including supply and demand, investor sentiment, and regulatory actions.

Crypto whales have the ability to impact the market by simply manipulating market sentiment. If a whale decides to sell a substantial amount of a particular cryptocurrency, it can cause the price to drop. Conversely, if a whale buys a significant amount, it can increase the price.

Whales have the ability to manipulate the market to their advantage: Due to their significant holdings, whales can influence the price of a particular coin or token by buying or selling large amounts of it. This can create a domino effect, causing other traders to follow suit and creating a trend in the market.

You can track the wallets of crypto whales by using tools such as Whale Alert, DexCheck, DeBank, and Cryptocurrency Alerting. After you find an address that's potentially interesting, you can track its activity in detail using a blockchain explorer such as Etherscan.

Anti-whaling mechanisms

Ownership Limits: Setting a maximum percentage of the total token supply that any one address can hold ensures a more equitable distribution of tokens. This prevents whales from having excessive power over the token ecosystem.