Understand the Bitcoin whale phrase

Amid the nascent crypto market with a total market cap of around $ 220 billion, a number of investors with large assets have the ability to significantly influence Bitcoin’s price. Therefore, raising awareness about Bitcoin whales and how they manipulate the cryptocurrency market is essential.

Who is the Bitcoin whale?

Bitcoin whales are often those who accept Bitcoin from the very beginning with millions of dollars in cryptocurrency value. Whales can also be highly capitalized individuals who want to venture capital, who have discovered the cryptocurrency market is a good place to make a profit.

In addition, large institutional investors such as hedge funds and trading desks can also be viewed as great whales.

Interestingly, only about 1,000 people own 40% of all Bitcoin right now, making up a very low percentage in the large ocean full of small fish. Meaning that if one of the whales starts selling their Bitcoin, the market will turn bad.

A recent example of Bitcoin whale is Mr. Nobuaki Kobayashi. Although not selling cryptocurrencies through exchanges to avoid market price influences, Kobayashi is still seen as a big whale. He sold out 36,000 BTC divided into 5 batches between December 2017 and February 2018.

How whales manipulate the market

Initially, Bitcoin whales traded on large exchanges with high liquidity. However, as the crypto market matures, more and more OTC brokers are launched to serve large investors, giving traders more anonymity and access to liquidity than exchanges.

OTC brokers such as Cumberland and Circle have sizes between $ 100,000 and $ 250,000 for cryptocurrency transactions, meaning that the richest Bitcoin holders can transact with each other without going through exchanges. deal. In some cases, OTC brokers will source liquidity from different exchanges and reduce impact on the overall market.

Whale Altcoin

The impact of the whale is most likely felt in the altcoin market. With a market cap of less than $ 100 million, the altcoin market shifts significantly if a holder decides to sell their assets.

Therefore, it is important to be aware of the asset allocation of small-cap altcoins and closely monitor order books to see if whales exist.

When does the whale act?

Tracking whales is becoming more and more difficult due to the proliferation of OTC brokers. However, whale tracking is still not a bad idea if you have large sums of money and these investors have the potential to influence your portfolio.

To identify whales, the first thing you can do is track the wallet addresses of major holders – as well as exchange wallets – to stay alert for any significant changes.

When investor Roger Ver deposited 25,000 BTC (worth $ 159 million) to Bitfinex on November 12, 2017, many small investors panicked and worried that he was about to sell them.

While $ 159 million may not sound like much, but in a market with a market cap of $ 100 billion (at the time), selling $ 159 million in one go will cause the price to drop rapidly.

In addition, you can also see the whale in action by tracking the order book. If you suddenly see larger buy orders than usual, there’s probably a whale in the swing. Of course, the same goes for larger sell orders than usual.

When it comes to buy walls and sell walls, it is important to note that they can be a form of market manipulation when traders close their trades after trading. This buy and sell wall appeared on the order book and caused new investors to jump in.

You can also spot whales if there is a change in the market cap of a particular cryptocurrency while not having any influential news released.

When the market has big fluctuations, or a particular currency rises in value confusingly, there’s a great possibility that whales have entered the market.

While some members of the crypto community deny whales manipulating the market, in reality one can see it. “London whale” in 2012 is a concrete demonstration.

As more and more institutional investors enter the cryptocurrency market, the number of whales will increase with larger order sizes and larger trading volume, which will become the norm for a market. maturation school to recruit new players.

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