How Do Crypto Whales Affect Cryptocurrency Markets?

A cryptocurrency whale, often known as a “crypto whale” or just a “whale,” is a word used in the community to describe people or organizations that hold substantial quantities of cryptocurrencies.

Being a whale in the bitcoin world is a subjective experience. Most of the time, the community appears to concur that a whale account is one that has a significant portion of the coins in circulation. In general, whales appear to represent more than 10% of all cryptocurrency holders.

Learn more about cryptocurrency whales and how their big holdings might affect the market and cryptocurrency investors.

Learning about cryptocurrency whales

Because whales are enormous in comparison to the tiny fish in the bitcoin ocean, major cryptocurrency holders are also referred to as whales. In May 2022, four bitcoin wallets held 3.49% of the total amount of bitcoin in circulation, and the top 100 wallets held roughly 15.36% of the total amount.

Even more concentrated is the meme coin that gained popularity, Dogecoin. 15 addresses had more than 29.5 billion Dogecoins, or almost 52% of the total in May 2022.

The crypto community and investors keep a careful eye on these big accounts. The Whale Alert website and Twitter account immediately make public any transactions made by any of the top 100 wallets.

Effect of a Whale on Liquidity

Whales can be an issue for cryptocurrencies. This is due to the concentration of money. Because they are prominent wallets, especially if it remains in an account unmoved. Because there are less coins accessible. When coins are sitting in an account rather than being utilized, the liquidity of that particular cryptocurrency decreases.

The Price Impact of a Whale

Whales are another factor that can enhance price volatility, particularly when they move a significant amount of cryptocurrency in a single transaction. For instance, if a bitcoin owner attempts to exchange their cryptocurrency for fiat money, the lack of liquidity and huge transaction size put downward pressure on the price of bitcoin because other market participants will be able to observe the transaction. Other investors are on high alert when whales sell, looking for signs that they are “dumping” their assets.

The average quantity of a certain cryptocurrency that is deposited into exchanges, or the exchange inflow mean, is a common indicator that cryptocurrency investors keep an eye out for. If there are a lot of whales utilizing the exchange and the mean quantity of coins per transaction increases above 2.0, whales are likely to start dumping.

What Investors Can Learn from Cryptocurrency  Whales

Anyone with a significant bitcoin holdings has a variety of options for moving their assets. It should be emphasized that a whale’s activity is not always indicative of a sale of their holdings. Instead, they could be switching wallets or exchanges, making a sizable purchase, or other activities.

Whales occasionally try to conceal themselves by selling their assets for less money over a longer period of time. When this happens, the market can become distorted, which can cause prices to fluctuate wildly. Investors keep an eye on the known whale addresses in order to count and value the transactions.

It is a smart idea to keep an eye on what the whales are doing if you’re a crypto investor. Movement, nevertheless, doesn’t always indicate that you should become anxious. If you’re going whale watching, it would be worthwhile to pay attention to the whales. That are business owners that have made significant cryptocurrency investments.