Important things to know about crypto whales
In the crypto world, several factors contribute to its volatility and fluctuations in several other actions. Aside from the familiar reality of the rise and fall of cryptocurrency prices, other variables contribute to these events. Crypto whale stands as one of them. These individuals can change the prices of the market by buying or selling significant amounts of assets. Read on as this article will help you understand more about these influential crypto stakeholders.
Who are crypto whales?
Crypto whales are people or organizations that own significant amounts of cryptocurrencies after building up their assets through initial investment, mining, or other methods. Whales, who hold colossal crypto holdings, can influence the market by buying or selling huge amounts of assets, changing prices.
Many people often associate whales with significant amounts of instability in the crypto industry. A practice known as “whale watching” is used by traders and investors to keep an eye on them for useful information and make wise investment choices.
What are the different characteristics of a crypto whale?
While there is no established minimum number of Ethereum assets a person or entity must hold to qualify as a whale, whales hold significant amounts of cryptocurrency. The expression may be more simple depending on the particular cryptocurrency in question.
When a cryptocurrency owner controls a significant portion of a given coin’s total supply and has the power to influence price changes through trading, many refer to them as “whales.”
To put this into perspective, a person who owns an asset worth $2 million and has a market capitalization of $200 million is a whale. In contrast, a person who owns an item worth $3 million and has a market value of $30 billion cannot be a whale. Despite having $3 million in cryptocurrency assets, the former has more significant market influence than the latter.
Ways to identify a crypto whale
1. By observing trading trends
Finding whale activity can be done by looking at trade trends. Large trades made by whales are known to affect the market. They can also lead to unexpected price increases or decreases. By keeping an eye out for strange patterns, you can spot potential whale activity.
You can search for significant transactions using cryptocurrency explorers and websites such as Cryptonica or Blockchain.com. The movement of a huge amount of Ethereum can indicate the presence of a whale.
2. By scrutinizing their social presence
Another technique for spotting whale activity is to monitor social media, especially Twitter. On social media, whales often express their views on cryptocurrencies, market movements and investment approaches. You can learn more about whale movements by looking for posts or comments on these accounts.
Whales can operate anonymously or share their holdings between multiple wallets, except for the more outspoken whales, who often publish their holdings on social media to hide their holdings.
Advantages of whale watching for crypto investors
1. It provides an understanding of market sentiments
Knowing the market mood is one of the main benefits of whale watching. Whales engage in huge trades, and their decisions can significantly influence investors’ sentiments about a specific asset.
Investors’ confidence could falter if whales start selling significant portions of their holdings in a particular asset, putting more downward pressure on the asset’s price. On the other hand, whales can increase the price of an asset, making investors more hopeful. Knowing whaling activity sooner than others can put you in an advantageous position.
2. It opens up investors to effective information
Whale activity can indicate secret information that can influence the market, offering insights into market sentiment and lucrative opportunities. You can gain early knowledge of these improvements by monitoring whale behavior, which can help investors make sound investment choices.
Whale watching setback for crypto investors
It is important to know that it is dangerous for investors to base their trading decisions solely on what the whales do. This can open the way for more setbacks. Read on as we discuss other ways whale watching can negatively impact crypto investors.
1. The manipulation potential of whales
Whales can and often do market manipulation to their advantage and to the detriment of others. They can buy a ton of tokens to raise prices, then sell them before others figure out their ruse. In most cases, smaller traders bear this burden.
2. Deliberate omission of information
Another possible consequence of whale watching is the information imbalance which is to the disadvantage of smaller retailers. Investors should conduct extensive background research to ensure they do not fall victim to pump-and-dump schemes because whales often have proprietary knowledge that smaller traders do not.
3. The presence of emotional influences
It’s also important to remember that whales, like any other investor, can make judgments based more on emotion than logic. Therefore, following whales without adequate studies can lead to serious economic choices.
