Crypto whales

The cryptocurrency market enjoys unflagging popularity among individual clients, institutions and countries, despite the fact that it is characterized by great uncertainty and volatility.

Investors observing this market try to predict its movements by using technical indicators and imitating its biggest players. Big players — the so-called whales often have access to knowledge and tools that an individual investor can only dream of.

Technically speaking, whales are individuals or institutions that own large amounts of a particular cryptocurrency. Institutions or people in possession of such large amounts of coins have the ability to manipulate the price and influence the market by increasing or reducing the liquidity of a given cryptocurrency. By placing an order on the cryptocurrency market to sell a huge amount of coins at a very low price, the whales automatically make the market uneasy so the prices go down. When the price drops to what the whales expect, they buy more coins.

Such a procedure is called a sell wall and prevents the price from rising above a certain level.

Whales also use the “buy wall” method. It consists in artificially inflating the price. By placing orders for the purchase of a given coin on the market at much higher prices, smaller customers feel the fear of missing an investment opportunity.

Both of these methods on regulated exchanges are illegal, although due to the lack of specific cryptocurrency market regulations, they are still used and affect price volatility.

To be successful in this type of investment, you need to understand and track whale behavior. Currently, tracking movements on wallets is much easier thanks to appropriate tools such as Glassnode or Cryptoquant. Such statements make it possible to obtain data that signal the intentions of buying and selling by whales.

The four most popular moves that affect the market are identified.

Transfer from the wallet to the stock exchange — a huge amount of tokens put on the stock exchange for sale affects the market and changes the price.

Transfer from the stock exchange to the wallet — whales by withdrawing funds from the stock exchange to the wallet give the market a signal that they intend to buy. Placing so much capital in stablecoins can also mean a slowdown or even bear market.

Transfer from the stock exchange to the stock exchange — this transfer is called arbitration, its purpose is to use the difference between prices on exchanges to make a profit (with such an amount of tokens, even a small difference brings profits).

Transfer from wallet to wallet — in such transactions it is difficult to determine what the purpose is (whether it is to buy or sell), therefore they are sometimes misinterpreted. This is the most popular way to trade cryptocurrencies between whales. This eliminates the problem of limiting the volumes available in the order books.

Please note that these are not the only indicators that suggest changes in trends in the cryptocurrency market. The aforementioned tools or companies that analyze whale movements significantly assist in making investment decisions. The fact is that the market is very volatile and therefore difficult to predict, and before you start investing, you should think about the strategy and the amount of funds that you are able to spend on it.