Crypto Whales: How Do They Control the Market?

Crypto Whales is a term that come in use on numerous occasions in the crypto world, the term whale is synonymous with the largest mammal on the planet, ‘whale’.

Crypto whales are entities that are either individuals or firms that make significant amounts of investment in a particular crypto coin, which naturally gives them the power to control its valuation.

In this blog, we will discuss the characteristics, behavior, and market strategies of the crypto whales.

Crypto Whales Definition

While there is no universally set percentage that separates crypto whales from other investors, a general rule of thumb is assumed:

Market Capitalization

• • Big Coins: In the major crypto coins such as Bitcoin and Ethereum, the crypto whales can refer to an entity holding more than 1% of the supply.
  • Mid-Sized Coins: These include crypto coins like Polygon and Solana, where whales could be defined as entities holding more than 5% to 10% of a particular crypto.
  • Small Coins: Smaller coins are mostly meme coins or from games like Decentraland. Since the supply is on the lower side, crypto whales are usually defined as someone holding more than 2% of the supply.

Characteristics of Crypto Whales

Large Holdings

Whales are characterized by their possession of a significant percentage of shares in a crypto coin; this percentage exceeds the percentage of the average investor.

Strategies

The main objective of holding a large number of shares in crypto is to take control of market prices; their buying and selling in large volumes trigger price fluctuations.

Entry and Exit

Whales have a good sense of market timing as they enter or exit the market strategically and take advantage of the market situation in order to maximize profit.

Anonymity

Many crypto whales prefer to maintain a level of anonymity, which raises questions and mystery about their activities.

Long-Term Holding

Some whales go for short-term investment, and others go for a long-term investment approach that influences market sentiment.

Market Analytics

The majority of crypto whales have deep knowledge of market dynamics, and by leveraging advanced analytics, trading algorithms, and market parameters, they put themselves ahead of the market trend.

Manipulation

Since significant holdings of crypto whales can potentially manipulate small to mid-size crypto coins, Crypto whales can coordinate their buying and selling, which further leads to pump-and-dump schemes and other market manipulative practices.

Let’s look at how many types of crypto whales are there:

Types of Crypto Whales

Small Whales

• • • Hold a smaller percentage of shares in crypto coins than other types of whales, but still higher than normal investors.
    • Their actions can only affect low-scale crypto coins, not the established ones.

Medium Whales

• • • Hold more shares in crypto coins than small whales.
    • With strategic trading and grouping with other whales, they can affect the market in their favor.

Large Whales

• • • Have significant amounts of shares, even in a major crypto coin’s total supply.
    • Can significantly impact market prices and trends with their trading activities.

Institutional Whales

• • • Include institutional investors like firms and corporations.
    • Possesses larger capital with a more strategic approach to the investment strategy.

Crypto Whale Spotting Tool

These spotting tools are made to track and analyze the movements of crypto whales to help general investors in decision making about their investment.

CryptoReach is one such app where the names of top crypto whale firms are displayed along with the ownership percentage of ‘Investors, Retail, and Whales’.

Now, let’s talk about strategies that crypto whales use for strategic advantage.

Strategies Adopted by Crypto Whales

Accumulation

One of the reasons they are called ‘Crypto Whales’ in the first place is that they accumulate a large percentage of shares in a particular crypto coin over time to take advantage of the price fluctuations.

Pump and dump

In the pump and dump scheme, crypto whales intentionally inflate the price (pump) through coordinated buying, then sell off their holdings at an inflated price for their profit but lose to other investors.

Spoofing

Whales spoof the system by placing large buy-and-sell orders with no intention of executing them, which creates the wrong impression of the market’s demand and supply that would affect the decision-making of other investors.

Market Manipulation

Some whales may engage in market manipulation by spreading false news, fear, uncertainty, doubt, or some other tactics to influence market prices and sentiment.

Leverage Trading

Whales can use leverage to make their trading position strong. The process involves borrowing funds to trade a larger position than the initial capital.

There are many other types of manipulative practices done by crypto whales, such as wash trading, margin trading, arbitrage, swing trading, etc.

Influence of Crypto Whales on the Market

Crypto whales naturally has a big influence on the cryptocurrency market due to their significant holdings in cryptocurrencies.

Their trading activities, like buying and selling, especially in large volumes, can cause drastic fluctuations in the valuation of crypto.

Moreover, whales can impact market sentiment, which can trigger the behavior of other investors.

Furthermore, the ability of crypto investors to create liquidity and the scarcity of crypto assets lead to market volatility.

As a result, understanding and tracking the activities of crypto whales is an important part of risk management that normal investors must do.

Frequently Asked Questions

Q1: What is a crypto whale?

A1: A crypto whale refers to an individual or entity who owns a significant amount of cryptocurrency, often with the power to influence market prices due to their large holdings.

Q2: How do crypto whales impact the market?

A2: Crypto whales can cause drastic price movements by buying or selling large volumes of cryptocurrency, triggering either bullish or bearish trends depending on their actions.

Q3: Are crypto whales good or bad for the market?

A3: The influence of crypto-whales is debatable. While they can create volatility, their deep pockets provide liquidity and opportunities for trading and investment.

Q4: How can one identify a crypto whale?

A4: The primary indicator of a crypto whale is the size of their holdings, which is visible on the blockchain. Significant transfers or movements of funds can also provide clues; some apps show the percentage of total shares held by crypto whales.

Q5: What are the risks associated with crypto whales?

A5: Crypto whales have the potential to manipulate prices and exploit smaller traders. Additionally, their actions can create unpredictability, leading to the instability of the market.