The word “whale” refers to an individual or entity that owns a large amount of a specific cryptocurrency. There is no precise cutoff point for this definition, however, others believe a Bitcoin whale should have at least 1,000 BTC.
A whale is also someone who owns enough coins or tokens to have a major influence on market pricing by purchasing or selling large amounts. Slide in to get the full details on crypto whales and the effects they have on cryptocurrencies.
What is a Crypto Whale?
Cryptocurrency whales, also known as crypto whales, are people or organizations that hold huge amounts of a particular cryptocurrency. A crypto whale is a person or entity that has enough digital currency to significantly affect market values by trading large sums of coins and tokens. Although there is no clear or defined threshold, it is said that most Bitcoin whales own at least 1,000 bitcoins (BTCs).
Because they hold so much bitcoin, most crypto whales avoid trading on traditional crypto marketplaces because their huge transactions might overwhelm the liquidity of trade volumes. Instead, they participate in over-the-counter (OTC) cryptocurrency trading, in which they purchase and sell crypto to one another, often off-chain.
Whales have a big influence on blockchains that use a proof-of-stake (PoS) protocol because higher amounts of staked money result in more voting power. The presence of whales in these networks might be a positive sign of the blockchain’s stability and development. However, the vast majority of money owned by whales can have a detrimental influence on power and voting distribution.
Effects of Crypto Whales on Crypto
Before we get into how whales may affect the market, there’s something else you should know. Whales can purchase a significant portion of a certain crypto token and take control of the platform’s on-chain governance mechanisms. This would eventually offer them more voting power over the direction a certain token takes.
Needless to say, this coin has two sides. On the one hand, the whales contribute stability, which is a positive indication and demonstrates a commitment to helping the system thrive. On the other hand, the presence of a whale on a network might be a warning indicator of power centralization.
Now here are the effects crypto whales have on markets:
Liquidity
The amount of a certain cryptocurrency that is accessible for use is referred to as liquidity. While crypto whales add riches to a network, they frequently reduce liquidity since their funds remain static.
Instead of going from one trader to the next, a crypto whale’s assets just sit in a massive heap. When coins are stored in a crypto whale’s accounts, there is less currency available for other investors to trade with.
Price
Crypto whales have a huge impact on cryptocurrency prices because their transactions account for such a big proportion of the total circulating currency. If a whale sells their crypto for fiat, the currency’s price will almost certainly fall.
If numerous crypto whales start selling their holdings, investors will be on high alert. The more large investors that sell their shares, the lower the coin’s price is expected to fall.
What’s whale watching?
Whale watching is the practice of monitoring a crypto whale’s market behavior. Identifying a crypto whale allows typical users to monitor their market movement while attempting to forecast the whale’s next move. This enables the user to profit while minimizing potential losses.
Crypto whales have affected some of the world’s top cryptocurrencies, including BTC. As a result, smaller investors must monitor the most active cryptocurrency users and stay aware of any substantial changes to their crypto wallets in order to alter their investing plan accordingly.
Additionally, there are specialized cryptocurrency websites that provide tracking and “watching” services for crypto whales with various metrics to help smaller investors. They also allow users to vote for certain cryptocurrencies that they find most enticing to gauge and provide valuable statistics on the most popular coins and tokens.
Well-known Whales
Crypto whales are wealthy individuals that frequently make news owing to their positions and prominence in their respective sectors. Crypto whales may also be major companies that own significant sums of cryptocurrency. Here are a few well-known cryptocurrency whales:
- Brian Armstrong: Brian Armstrong (CEO of Coinbase), is one of the world’s largest cryptocurrency exchanges. Every day, Coinbase executes cryptocurrency transactions worth billions of dollars. Armstrong’s net worth is presently estimated to be about $3.6 billion.
- Changpeng Zhao: Zhao, often known in the crypto world as CZ, is the founder and CEO of Binance, another famous crypto exchange. CZ made significant BTC investments in 2014 and founded Binance in 2017. It has subsequently expanded to include subsidiaries such as cryptocurrency debit and credit cards, Bitcoin mining, and venture capital funds.
- Winklevoss twins: Cameron and Tyler Winklevoss rose to prominence after alleging that fellow Harvard student Mark Zuckerberg stole their idea for their university’s social media site. The twin brothers obtained a $65 million settlement in 2012 and invested heavily in BTC. They currently have over 70,000 bitcoins in addition to other holdings. In 2014, they also launched the cryptocurrency exchange Gemini, which also processes millions of dollars in daily crypto transactions.
Conclusion
That brings us to the end of this article guys! As previously said, crypto whales are people or organizations with a large number of crypto assets in their crypto wallet addresses. These whales have the ability to impact market price fluctuations and liquidity for a certain crypto asset.
Nonetheless, investors can employ several ways to track whales and protect themselves from their movements. However, these motions may not always need an alarm.
