Bitcoin reached $65,000 on March 4th, 2024, owing to an influx of funds that brought it closer to its all-time high. That sparked curiosity for further research on how to buy Bitcoin and prompted many to discuss the cryptocurrency. The most valuable cryptocurrency in the world rose by roughly 50% this year, its value rapidly changing on account of the growth of spot ETFs, the single most disruptive trend in asset management for the past years. Many whales have added digital assets to their balance sheets, amassing billions worth of Bitcoin.
Despite that the spot Bitcoin ETF market has drawn reasonable attention in the past couple of weeks, the actions of whales can dictate trends, attracting investors to the nascent niche.
Higher investment will take precedence in determining Bitcoin’s price action. Simply put, it won’t come as a surprise if more investors devote their portfolios to the world’s leading cryptocurrency. Whales have begun repurchasing Bitcoin after the SEC confirmed filings for possible Bitcoin ETF products in September 2023. Additionally, the regulatory struggles and MicroStrategy’s resilience, not to mention El Salvador’s Bitcoin holdings, have instilled confidence in the asset. The fact of the matter is that a small number of Bitcoin holders control the vast majority of its supply. The distribution of Bitcoin is determined via network addresses.
Wallets That Hold Large Amounts of Bitcoin Are Called Whales
If you’re wondering what a crypto whale is, it refers to a person or an entity that holds a lot of Bitcoin and has the power to influence price movements with just one trade. Whales are the biggest players in decentralized finance. Whether buying, selling, or trading Bitcoin, they can change the cryptocurrency’s supply and demand, to say nothing of its selling price. The accepted minimum threshold for a Bitcoin whale is 1,000 BTC. To escape from whale-watching tools, institutional investors and crypto millionaires diversify their holdings by keeping Bitcoin in multiple wallets. Whales are very large compared to smaller fish, which can’t visibly affect market share.
Some Bitcoins May Be Forgotten Rather Than Lost And Could Resurface
A surprisingly considerable amount of cryptocurrency is lost, the estimates varying between three million to as many as six million Bitcoins. The chunk of supply has been lost forever because people don’t remember the details of their digital wallets, meaning that countless Bitcoins reside on discarded hard drives. Bitcoin can be misplaced temporarily. To be more precise, even if the funds haven’t been moved in a while, it doesn’t mean they’re necessarily lost; the tokens are effectively locked away. It hasn’t been uncommon for wallets that have been inactive for five years or more to suddenly surface.
The owner of the Bitcoin address and wallet might try to sell immediately for profit or wait for the right time to unload the coins. The holdings of a whale enable them to influence Bitcoin’s immediate demand and supply on exchanges when they trade. Since most whale wallets are publicly monitored, the broader trading community responds to their decisions, usually in a large price movement. You can use whale watching to inform your own strategy or better understand the cryptocurrency market but don’t blindly follow whale trades. Make informed decisions that can help you profit from the latest Bitcoin price.
Bitcoin Whales Can Be Exchanges Holding Assets on Behalf of Customers
Cryptocurrency exchanges act like banks and brokers; it’s just that they’re not subject to the same types of rules and regulations. You can purchase Bitcoin (and other digital assets) with fiat money, like dollars or pounds. It’s estimated that 2.3 million Bitcoins are held on exchange addresses, mostly in the name of customers. No new coins will be released after the limit of 21 million is reached and more than 19.7 million BTC are in circulation. A decrease in cryptocurrency held on exchanges would indicate a bullish signal and expectations of rising prices. All in all, crypto exchanges hold roughly 11% of all Bitcoins.
Knowing How to Spot a Bitcoin Whale Can Be Helpful
There are approximately 80 wallets with 10,000 coins (or more), whose owners are anonymous. Even if the identities of Bitcoin whales remain obscure, it’s possible to trace BTC transactions and identify the person/organization involved. Of course, the process can be challenging and requires specialized skills and tools. As a small fish with modest crypto holdings, you need all the help you can get. Tracking Bitcoin whales can help you pinpoint market trends and study successful investment strategies, so there’s no better time than now to learn how to spot one.
Explore & Navigate Through the Data Stored on The Blockchain
With a blockchain explorer, you can navigate and review vital information about cryptocurrency transactions, which can be combined with off-chain data. All Bitcoin transactions are recorded on the public ledger; it’s accessible to anyone, anywhere in the world. You can use Blockchain.com, Blockchair, or Tokenview to find large amounts of BTC being moved. If you’re interested in a specific block, enter the block height or hash rate into the search bar.
Assess Trade Patterns
By analyzing trading volume patterns, you can obtain valuable insights into opportunities or risks in the cryptocurrency market. As mentioned earlier, Bitcoin whales tend to make large trades that can generate sudden price spikes or dips, creating artificial demand or selling pressure. To trade these patterns, pay close attention to the volume, breakout direction, and target price.
Follow Different Pages on Social Media
Last but certainly not least, it’s a good idea to keep an eye on social media news. In case you didn’t already know, Bitcoin whales sometimes spread information through social networking channels, sharing their opinions on investment strategies or the cryptocurrency market. Platforms like X (Twitter) are invaluable resources when it comes to tracking whale activity. Be on the lookout for posts and comments from these accounts.
Concluding Thoughts
Approximately 50% of all Bitcoins in existence are held by the general public, but it might be lower if the number of lost tokens is higher than the number of coins whales are sitting on. As far as investment firms are concerned, Grayscale is the biggest Bitcoin holder, with about 450,000 BTC. Even if it’s not a simple effort, you can protect your investments against whales, but be sure you know why you’re selling.
