Key Insights
- The market is heavily influenced by the dynamics of supply and demand.
- Because of this, large investors (also known as crypto whales) typically have an influence over the market.
- There is no set-in-stone description of what a whale is, but a typical Bitcoin whale has at least 1,000 BTC in their wallets.
- Whale status can vary for other assets, depending on how much of its supply an investor holds.
- While monitoring crypto whales can be a great way to identify entry and exit points, it should not be a substitute for well-researched decisions.
The crypto market is full of different classes of investors, all of whom are responsible for its fluctuations.
One of the biggest cohorts of investors influencing the market’s volatility are the crypto whales.
But what exactly is a crypto whale? Why do they matter so much in the crypto space, and how often do they influence prices?
Let’s break it all down.
Understanding Crypto Whales
Crypto whales are individuals—investors who hold large amounts of crypto.
These holdings are so large that a single whale can influence the price of an asset simply by buying or selling.
The market is governed strongly by the dynamics between demand and supply. This means that a whale interacting directly with the market can sway these dynamics.
The word “whale” is even directly derived from how these investors make waves when they splash into (or jump out of) the market.
So how much does it take to become a whale?
To begin with, there is no strict definition of what it takes to be a whale. There are no hard-set rules about what it means to be considered one.
However, in the general sense, Bitcoin investors who hold at least 1,000 BTC are considered crypto whales.
This threshold can vary by cryptocurrency, depending on factors like market cap and how much of its total supply a “whale” holds.
Types of Crypto Whales
As mentioned, there are no set criteria for what it takes to be considered a whale. However, there are several cohorts of investors who might be considered in this category.
One of these is the early adopter category. This class of crypto whales got into a cryptocurrency during its earliest days and amassed large holdings before prices began to surge.
Another class includes the Institutional investors. These include investors like Hedge funds, investment firms, companies, and corporations. They typically buy large amounts of digital assets and become crypto whales.
Crypto exchanges can also be considered as crypto whales in some scenarios, considering how they hold large amounts of crypto in their wallets.
When crypto exchanges buy, sell, get hacked, or shift holdings, prices can fluctuate wildly as well.
Finally, the third class of crypto whales include the founders and developers, who get massive crypto allocations before the launch of a project.
All of these categories of investors hold large amounts of crypto and can significantly influence the market at will.
What Are Some Ways Whales Can Move?
Crypto whales are a major part of the crypto market’s trends and can influence prices deliberately or otherwise.
One of the biggest ways they interact with the market is via price manipulation.
Whales typically manipulate prices by either buying or selling huge amounts of tokens on an exchange.
Such a large move often causes panic selling (or buying) among retail traders, which contributes to price movements.
Another way that crypto whales influence the market is via liquidity. Whales sometimes move large amounts of crypto, which affects liquidity and can affect how easily other traders buy or sell an asset.
Many observers also track the market in search of whale movements in particular. When these whale movements occur, they can affect market sentiment and cause fears of a price drop.
How Do Whales Move Their Crypto?
One more difference between a whale and a retail trader is in how they move their assets.
Whales typically do not trade on regular exchanges and might choose to use methods like Over-the-Counter (OTC) Trading.
They can also employ multiple wallets to remain discreet or use algorithmic trading, where bots do all the heavy lifting and avoid drawing too much attention.
Can You Track Crypto Whales?
The answer to this is yes. Whale activity is highly trackable, considering how blockchain technology is publicly available.
Blockchain explorers can be used to monitor this class of investors as well as specific social media accounts (like Whale Alert on X/Twitter).
Some traders even enter or exit the market based mostly (or even solely) on the movements of whales.
Investors should remember though that while whales have the power to influence the market, they are only a small aspect of a much larger picture.
Their actions can influence volatility, but long-term market trends often depend on multiple other factors.
Some of these include broader adoption, regulation, technological advancements and many other similar factors
Being aware of whale movements helps. However, it should not be a complete substitute for well-researched decisions.
Putting It All Together
Crypto whales are an undeniable aspect of the market and can be great for properly tracking things like price reversals and entry points.
Their large holdings give them a great degree of influence over the market, allowing them to sway prices and influence market sentiment.
However, while their large holdings put them in a position to make more gains than retail investors, they are also at more risk considering how the market tends to behave unpredictably at times.
Whether you’re a small investor or an institutional investor, keeping an eye on Whether you’re a small investor or an institutional player, keeping an eye on whale movements can provide much-needed insights.
