Whale – who is on the cryptocurrency exchange and is it worth being afraid of?
What are Crypto Whales?
In the cryptocurrency world, "whales" are large market players. The term is an analogy to the largest mammals in the water. A cryptocurrency whale refers to a holder who possesses a significant number of tokens.
Why do other market participants pay attention to whales?
The actions of cryptocurrency whales serve as an indicator:
- Small investors tend to sell their coins en masse if they learn that whales are selling their assets.
- Conversely, large purchases by market whales instill confidence in other market participants.
However, it is not advisable to fully trust whales.
Should one be wary of whales?
Whales themselves are not inherently dangerous; they are simply individuals with a large number of cryptocurrencies. It is their market actions that can lead to losses for other investors. There is a theory that suggests that most tokens are held by whales who skillfully manipulate exchange rates. While this theory is not entirely accurate, whales do have the ability to exert influence:
- Pump and dump schemes: Whales can artificially increase the price of an asset and then swiftly sell it, generating significant profits.
- Sell walls: Whales place a multitude of sell orders that other market participants take into account. However, these walls are removed at the opportune time, causing losses for other players.
- Bear manipulation: Deliberate price decreases that allow whales to accumulate assets during panic selling by other participants.
Indeed, whales have some influence on the market. However, it is important not to overestimate their impact. Market dynamics are influenced to a greater extent by news events or global events.
How many tokens does it take to be considered a whale?
The issuance of Bitcoin is limited, with a maximum of 21 million bitcoins that can exist in the world. The largest holder possesses 5% of the issuance, which is approximately one million bitcoins. Less significant whales may own one or two percent of the Bitcoin issuance, which is sufficient to conduct market manipulations.