What Is a Crypto Whale? | Built In (2024)

A crypto whale refers to a person or entity that holds a large amount of cryptocurrency, enough so that their transactions alone can affect the currency’s market.

Generally, someone owning at least 10 percent of a given cryptocurrency can be considered a whale. Others deem whale status to any crypto wallet that holds upwards of $10 million in a single cryptocurrency, or even a minimum of 1,000 BTC. Whales are closely monitored, or “whale watched,” by other shareholders since their portion of funds can sway or manipulate currency valuations — and the crypto ocean is full of them.

Looking at Bitcoin, the top 110 wallets, identified as those holding more than 10,000 BTC, own 15.35 percent of total shares. The top four accounts — those holding more than 100,000 BTC — own 3.42 percent as of May 2023, according to crypto data aggregator BitInfoCharts.

Why Do Crypto Whales Matter?

Crypto whales are the biggest players in decentralized finance, as just one of their transactions can single-handedly influence how a specific cryptocurrency is valued. Simply due to their sizable wallets, any move they make — whether buying, selling or trading coins — automatically changes the currency’s supply and demand, and resulting selling price.

Whales tend to trade in millions of dollars, which often directly lead to price swings and market turns. When whales buy into a crypto asset, this signals a growing demand of that specific coin to the crypto community, who tend to follow suit. When a whale sells or “dumps” a large portion of its holdings, price volatility follows in its wake.

“Crypto markets are generally quite thin, meaning that sales or purchases of bigger amounts can shift prices significantly higher or lower,” said Lars Seier Christensen, chairman of privacy-first blockchain Concordium and founder of online trading platform Saxo Bank. “Therefore, the trading actions of such whales are followed with interest in order to try to predict price moves.”

CRYPTO WHALES CAN SIGNAL A MARKET UPSWING

Crypto whales sway the market in a similar way to a large owner of shares in a company, said Winston Robson, co-founder and CEO of metaverse marketplace WeMeta.

Take for example, Elon Musk and his tweets. After the SpaceX founder added “#bitcoin” to his Twitter bio, Bitcoin’s valuation swelled by 14 percent in January 2021. It was the first time that the total market value of all cryptocurrencies breached $1 trillion, Reuters reported.

“Whales hold a significant proportion of a given cryptocurrency’s total supply, so often they are quite enthusiastic and loyal to their preferred crypto choice,” Christensen added. “Whales can be a supporting factor, if they hold on to their large positions instead of selling.”

CRYPTO WHALES CAN SIGNAL A MARKET DOWNTURN

Centralized cryptocurrency exchange FTX’s downfall may serve as a prime example. Although rumors claimed Sam Bankman-Fried’s project may be insolvent, it wasn’t until Binance, a rival cryptocurrency exchange and known crypto whale of the asset, announced its plans to exit that led to FTX’s collapse.

Binance liquidated its holdings — estimated at 5 percent of the total supply, or $580 million at the time — on November 6, 2022. Five days later, FTX filed for Chapter 11 bankruptcy protection as Bankman-Fried stepped down as CEO.

Crypto Whales Can Affect Decentralization

On the other hand, whales may be a threat to a central pillar of crypto — decentralization.

“Most blockchains are governed by their token holders, and influence on the decisions is most often correlated to the size of one’s stake,” Christensen said. “Hence, the more concentrations of big holdings, the less decentralized the decision making supporting a project may be.”

This influence extends to a project’s overall direction, as deliberated amongst the communities that run them: decentralized autonomous organizations, or DAOs.

“Crypto whales matter because they have a substantial and authoritative voice when it comes to DAO voting or community direction,” Robson said. “Some DAO votes have been 80 percent against and 20 percent for, but when a whale cast their vote it flipped to 96 percent for and 4 percent against.”

Crypto Whales Can Impact Liquidity

In terms of liquidity, if a whale sits on a large sum without any movement, it can hurt a cryptocurrency, as the total supply of most tokens is capped at a certain amount. With the concentration of coins locked in one wallet, smaller traders and investors are limited to the remaining, circulating tokens.

In an effort to keep their transaction activity off the radar, whales looking to sell their assets may do so in smaller batches over an extended period of time to prevent steep market distortions. Alternatively, they may also turn to a tactic external to regular exchanges known as over-the-counter trading. This allows whales to buy and sell crypto to each other using a transaction method that privately processes transactions off of a blockchain’s mainnet.

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Crypto Whale Examples

While legal names may not be attached, crypto whales can be traced back to their wallet address’s public key. A public key, which lends to blockchain’s component of transparency, is a string of alphanumeric characters that exposes account activity but doesn’t reveal any identifiable user information.

This dynamic creates a sort of pseudonymity, where crypto holders can be recognized without having their true identity known. Still, crypto community members have theories on who’s who in the whale pod.

The following list, which sources from CryptoSlate and the Bankless Times, compiles the top wallets linked to individuals, excluding known private or public companies as well as governments.

• Satoshi Nakamoto: Inventor of Bitcoin, Nakamoto holds one million BTC, or over $26 billion as of May 2023. To this day, no one can confirm whether this alias, pulled from Bitcoin’s white paper, belongs to just one person or a group of people.
• Brian Armstrong: The CEO of Coinbase, one of the largest crypto exchanges on the market, disclosed in a November 2022 tweetthat his company was in ownership of 2 million BTC, totaling $53 billion as of May 2023.
• Michael Saylor: The executive chairman and a co-founder of MicroStrategy reported his crypto standings at 17,732 BTC in an October 2020 tweet — amounting to $476 million as of May 2023.
• Chris Larsen: Co-founder of several Silicon Valley tech startups, it is estimated that Larsen’s 17 percent stake in Ripple translates to at least 5.19 billion XRP. As of May 2023 rates, that would come out to $2.4 billion.
• Changpeng Zhao: The CEO of Binance is a known crypto whale who holds 95 percent of his wealth as Binance coin and Bitcoin. Zhao’snet worth, estimated at $65 billion in March 2022, fellto$4.5 billion in December 2022 due to a crypto crash.
• Tim Draper:Venture capitalist Draper bought 30,000 BTC in 2014, converting to $806 million as of May 2023, during the market dip following a historic Bitcoin seizure case. Draper is also known to have investments in other crypto assets, such as Aragon’s ANT tokens.

What Is Crypto Whale Tracking?

“Crypto whale tracking is when people watch the activities of big holders of a particular crypto to try to predict price movements or understand the market sentiment,” said Daniele Servadei, CEO and co-founder of Sellix, a crypto-compatible e-commerce payment processor.

These accounts are closely monitored by the crypto community at large due to their heavy sway on the market. In fact, online trackers like Whale Alert broadcast transactions from top accounts in real time directly on its site and via its associated Twitter account.

“The purpose is general interest for some ... but certainly also with a hope of predicting short-term price moves of the involved tokens.”

“Investors may whale watch to inform their own strategies or to better understand the market,” Servadei said. Whale trends to note include buying, selling or a move in assets from their original wallet or exchange.

Christensen described a mirroring effect that smaller holders, nicknamed crypto minnows, may emulate as part of their trading practice, to accrue profit or avoid potential loss.

“Due to the transparency of the blockchains, it is of interest when a big holder is active in the market,” he said. “This can be tracked quite easily, and hence investors follow both actual transactions as well as movements in and out of exchanges, which may indicate an upcoming trading intention of a whale.”

“The purpose is general interest for some,” he added, “but certainly also with a hope of predicting short-term price moves of the involved tokens.”