What are Bitcoin Whales? What Does It Do?
The few who have embraced Bitcoin and cryptocurrencies since 2010 have become the whales of the market. So, what are Bitcoin whales and what do they do?
In this article, we will answer many questions such as what are Bitcoin whales, what they do, and how they affect the market. Keep reading!
The term whale refers to a person or group that can manipulate the market using large crypto assets. Whales are known as big players in the ocean, which is a metaphor for the crypto ecosystem. The latest trend in the market is to watch small investors (also known as small fish) ripples created by giant players for their benefit to make some money. They target smaller-volume altcoins rather than cryptocurrencies like Bitcoin.
Satoshi Nakamoto, the creator of Bitcoin, is considered the biggest whale in sight. Small investors need to know when a whale is buying and selling. A wrong decision can result in a heavy loss. Therefore, it is very important to carefully observe the market trend. In recent years, many programs have been developed to detect these big players.
Of course, there is no certainty about them. To better understand the crypto market, it is recommended to start manually rather than programs.
The biggest Bitcoin whales are big institutions like Hedge Funds and Bitcoin Investment Funds. A significant number of them have clearly disclosed their presence in the Bitcoin market. These include Pantera Capital, Binary Financial, Fortress, Bitcoin Investment Trust, Coin Capital Partners, and Falcon Global Capital.
Other whales have yet to show themselves. But they certainly took place from the depths of the ocean!
These funds manage hundreds of thousands of Bitcoins that they strategically and confidentially transfer to exchanges, in a special arrangement that is generally invisible to regular retail traders. This is where a Bitcoin whale finds meaning. That’s because other inhabitants of the ocean must get out of the whale’s way or relocate. That’s why whales do what’s intended.
How To Detect Whale?
Usually, the buying and selling volumes in a crypto market are split evenly. As the price increases, the percentage of buyers maybe 70%, and the percentage of sellers maybe 30%. And when the price starts to go down, it’s the opposite. However, if there is a whale on the market, the proportion of buyers can see an increase of up to 90% in a short time.
How Does the Bitcoin Whale Move?
In general, the larger the ocean, the larger the whales will be to create a significant wave. If a whale is not big enough for the ocean, it may get exactly the opposite of what it wants. So people buy the order. New markets are therefore much more prone to whale attacks.
Some cryptocurrency communities band together to circumvent the whale’s sell order. The wave of a Bitcoin whale could be a great opportunity for a new investor to start buying targeted cryptocurrency at many lower-than-normal values. On the other hand, it is bad timing for investors who are already allocated to sell their cryptocurrencies in the market.
Bitcoin whales could theoretically create waves of inflation in the prices of cryptocurrencies, and it can be assumed that they placed a buy order rather than a sell order of this size. A sudden increase in demand of this size will naturally increase the price of the targeted cryptocurrency significantly.
The group pools large buy orders, pushing the price of the crypto up, and then making waves to sell their coins at some point. Despite what has already been saying about Bitcoin and smaller altcoins, it is a fact that 1000 people own about 45% of the Bitcoin market.
Factors That Move Cryptocurrencies
Apart from the activities of whales, many other factors can cause a cryptocurrency to depreciate or appreciate severely. Swelling, usually caused by whale waves, is much more severe than that caused by other factors. For example, the prices of many cryptocurrencies fell drastically immediately after the bans of South Korea and China. However, we know that currencies in markets of this size are not susceptible to such attacks. Second, we are fully aware of the geopolitical situation that is causing this.
Why are Whales Important?
For example, let’s say that 10% of the shares of a company in any country are owned by a single person. If this person sells all their shares overnight, other shareholders and people who follow the stock market will ask, “is something wrong with the company?” With such thoughts, panic sells its shares below their value.
In this case, the user who holds the shares and sells them in panic damages. Because they sell at a value below the share, and the whales collect the shares at a cheap price. That’s how the system works in the crypto world. A user who has a small amount of bitcoin sells Bitcoin below its value, while whales buy cheap Bitcoin. This causes many Bitcoin or other crypto money holders in the market to lose, while a single person makes a large profit. In this way, a negative attitude towards the market is spreading.
What Should Be Done To Avoid Being Affected By Bitcoin Whales?
First of all, these words should not be perceived as investment advice, but there are a few ways to avoid damage from whale movements. You should not sell or buy in a panic. When you panic buys or sell, know that other people in the market have the opportunity to acquire assets that you have been forced to or expect to profit from, at low prices.
Therefore, instead of panic buying or panic selling while trading, you can wait for the market to calm down a bit. Also, the excessive decline or excessive rise of a cryptocurrency that you see as an investment tool should not affect you. Of course, it will be your most natural right to sell what you have and take your profit after extreme rises. Just be careful never to make decisions hastily when doing these operations. In addition, if you shape your investments by researching from more than one source while choosing the cryptocurrency to invest in, your probability of loss will be greatly reduced.