Who are cryptocurrency whales and how do they affect the market?
In the vast ocean of cryptocurrency trading, most traders can be compared to small fish. Sharks are similar to pumping groups, and whales - a small number of holders of the largest assets. Who and how they control crypto market and whether ordinary traders are able to get their share of profits from the actions of whales? Let's figure it out!
Crypto whales - who are they?
Whales are the most powerful players who have enough coins to manage the market. What determines their impact on the cryptocurrency market?
Let's compare the capitalization of the conventional and the cryptocurrency market. We have 65 trillion to about 300 billion dollars. Naturally, in a relatively small cryptocurrency ocean to become a noticeable figure is much easier.
Cryptocurrency whales, operating with huge amounts, are virtually beyond the control of state regulators and banks.
The price of a coin is determined by demand. Therefore, whales with huge assets can at their discretion manipulate the cryptocurrency market.
As a result, we have the following: the whale has a lot of cryptocurrency, which he uses for the sake of profit. And thousands of fish fill the cryptocurrency ocean daily with their relatively modest investments, giving whales the opportunity for quick and easy earning.
The wider the space, the easier it is to turn the huge whale. Therefore, the largest cryptocurrency whales have chosen the ocean of bitcoins. It:
- those who mined or had time to buy thousands, and even tens of thousands of bitcoins;
- large hedge funds
- crypto exchanges or producers of equipment for mining, able to buy/get any number of coins.
In the ocean of Bitcoin 80 percent of the coins are in possession of 109 owners - people and exchanges. Approximately the same picture with the ethereum, where 40 percent of coins are in the TOP-100 wallets. In a number of cryptocurrencies, this numbers may be up to 90%. But, in view of the fact that bitcoin has the largest capitalization for today, BTC whales are the most influential on crypto market.
There is, however, an opinion that there is no crypto markets at all and a limited group of operators isn't allowed to manage the market. But this doesn't correspond to reality. Whales with colossal assets feel confident in the ocean of the cryptocurrency and are able to manage the situation in the market with one easy movement.
Which strategies use crypto whales?
There are only three:
- Rinse with Repetition
The essence is simple, the same as in the usual currency or stock market. The whale initiates the sale of a large mass of coins at a price lower than the market price. Investors are observed a slight panic, and they massively get rid of a cheaper coin. As a result, the cryptocurrency rate falls. An eager whale at this moment begins to buy a cheap coin and the rate is restored, and even exceeds the previous level. This cycle can be repeated by the whale as much as he wants.
The math is simple. The whale, for example, has 20,000 bitcoins at a rate of 6,000 dollars. He deposit them on the exchange 6000 BTC at 5800. Investors, seeing a trend to lower prices, are actively involved in selling their more modest assets. As a result, the price of the bitcoin drops to 5000 dollars. Then the whale will instantly buy back its 6,000 BTC, and will also buy coins at the same low price. Total after the sale of 6,000 BTC for $34 million, the whale is buying 7,000 BTC for the same money. This is the rinse of bitcoins from the trader's wallets.
Here, the whale doesn't even need to lay out his own assets for sale. He simply creates the illusion of growth or a fall in the exchange rate of the coin, placing large orders on the exchanges, which will be very soon canceled and, naturally, not met. At the same time, it doesn't matter whether the orders are placed on the sale or on the buy.
The whale creates a large warrant. For example, to buy, and small traders start to buy a coin. The rate is growing rapidly and at the peak time the whale cancels its warrant and sells coins at an inflated price.
Similarly, when creating a warrant for the sale of a large number of cryptocurrency. As a result of the panic, small investors actively get rid of the cheap coin, and at a minimum price, the whale cancels the warrant and quietly buys an inexpensive cryptocurrency.
The main thing in spoofing is orders that the whale doesn't plan to execute. But there is also a risk of losing assets, if, for example, the 10,000 bills exhibited at a low price will be bought out by traders instantly. If the resources for the buy of traders aren't enough, then pending the redemption of the order, they themselves will lower the price of the coin, which will play into the hands of the initiating wave of the whale.
For non-public trade, whales are chosen by closed groups of brokers working outside the exchanges, or exchanges with private rates. The Pump & Dump strategy is outlined in the article above.
Whales and their influence on crypto market
It's easy to notice, that there is a conspiracy theory, among the player of the crypto market, about the alleged aspiration of a small group of whales to take to their hands all the whole crypto market. But why, then, does the whales need coins, if they are only in their hands? The more investors are on the market, the richer the whales get.
What has become good for whales after the recent collapse of BTC? They, undoubtedly, have earned their own, but the market has lost many existing investors and even more potential ones. As a result, the value of whale assets fell sharply. As you can see, whales don't need the fall of the cryptocurrency.
On crypto market, holders of large assets maintain a balance and set a strategic vector for development. And the fact that there is always a wave from the sharp movement of the whale, this is only an excuse for an ordinary trader to earn on raising or lowering.
How can an ordinary investor live among whales?
Experienced traders that are successful on the crypto market they know how to behave in a situation when the whale began to show activity. For example, the whale decided to play on a slide. Hamsters and most inexperienced traders will immediately begin selling their assets. But it is smarter to follow the strategy of the whale - wait a little and start buying up the cryptocurrency. The same applies to the situation when a whale increases the cost of a bitcoin or altcoin.
- The usual investor has the only task - not to miss the trend provoked by the whale. What do you need to do for this?
Keep track of what happens on large crypto exchanges. Any deviation from the usual rate of deductions indicates that the whale decided to throw out assets on the market and, as a consequence, one should expect a change in the exchange value of the coin. If it falls sharply - buy, grow - sell. But! Check the trend on several top wallets.
- Keep track of the orders of the top exchanges. If there appeared in it an unexpectedly huge sale/buy offer, then this is a clear sign that the whale has started its game. A whale is big and can easily create the illusion of a collapse or deficit of a coin. Act like it 0 - don't rush to buy or sell assets. Wait for a serious recession or recovery and only then proceed to active actions - selling or buying.
Who earns on the waves of crypto market, created by mighty whales? They are also whales, and experienced traders who are able to notice the whale trendи on time and take proper measures. Who creates the profit for the whales and sharks? "Hamsters", and inexperienced traders who don't consider themselves such. Therefore, inexperienced investors to participate in whale games has no perspective, except that someone will smile good luck. Whales - a necessary and useful element of any ecosystem - at least the real ocean, even the world of cryptocurrency. The smaller fish should either understand its benefits from any movement of the giant, or stay away from it.