Many Bitcoin whales have entered the cryptocurrency market over the years, and this has triggered the growth of the market remarkably. Bitcoin whales are among the many factors that contribute to the price volatility of cryptocurrencies. In this comprehensive article, we are going to talk about the influential market participants as well as the role they play in the cryptocurrency industry.
Who are Bitcoin Whales?
A Bitcoin whale is an individual or organization with 1000+ BTC in a single address. By having these large amounts of BTC, they're able to control the market to an extent. While these Bitcoin whales make money from the market by manipulating it, Blockchain companies also make money through contract agreements. Top blockchain companies use blogger outreach services such as Click Intelligence to help increase their reputation.
Understanding Bitcoin Whales Classification
As we've mentioned earlier, any entity that has at least 1000 BTC in one address is considered as a Bitcoin whale. However, there are several classifications of Bitcoin whales. There are "Humpback Whales" who usually have 5000 BTC or more, and there are the early supporters of Satoshi Nakamoto when he created Bitcoin by buying huge chunks at a relatively lower value at the time.
Current Market Situation
According to CoinDesk, the number of Bitcoin whales have dropped, and this may likely be as a result of the global economic crisis. Nevertheless, there are still quite some notable whales in the cryptocurrency market that manipulate the market to their advantage. Although the majority of these Bitcoin whales are not known, some of the popular names are Pantera Capital, Binary Financial, and Fortress.
Impact of Bitcoin Whales on the Market
As mentioned earlier, Bitcoin whales can push the market in the direction that they want. For instance, small investors can enter a trade with the mindset of selling while a bitcoin whale can alter this by buying, which will affect the position of the small traders. According to Brave New Coin, the number of whales is increasing, and this will likely affect the value of BTC.
How to Identify Crypto Whales in Action
Because of the increase of Over the Counter (OTC) brokers who now handle a substantial value of asset trades, it has become quite difficult to identify crypto whales. Some traders "whale watch" to know the positions of these crypto whales before entering a trade. You can identify crypto whales by monitoring the address of the largest holders and exchange wallets.
What to Look for When Monitoring Crypto Whales
If you are a small investor, it may be a good strategy for you to monitor crypto whales because of how quickly they can influence the market to go bullish or bearish. When monitoring whales, what out for sudden spikes in the market in reverse order. This will help influence your decision on whether to hold your position in the market or not.
Usually, a change in market capitalization that is not tied to any big market-moving news or major announcement indicates that a whale has entered the market. This is why some members of the cryptocurrency community demonize these whales as being responsible for most major price drops. And the more the whales that enter the market in the same direction, the more impact they have on the market.