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How Whales Are Affecting The Cryptocurrency Market

12th August 2019 by Tapper Filed under Uncategorised

If you have stayed around the cryptocurrency market long enough, then you will be familiar with the term “crypto whale”. This term usually refers to big players in the crypto space that are known to hodl and move around large amounts of any given coin, often affecting the price while they’re at it. We’ll discuss how whales are affecting the cryptocurrency market by considering the following:

Who is a Whale

In the cryptocurrency market place, the term whale is used to describe any individual or group that controls a large amount of Bitcoin or cryptocurrencies. Just like the size of the whale distinguishes it in the ocean, portfolio size of these individuals or groups sets them apart in the crypto industry.

It is estimated that roughly 40% of all the Bitcoins in existence are held by only about 1,000 people. That is some huge volume to deal with, no matter the ratio among them. Some of these whales are well known individuals and groups. Roger Ver, the Winklevoss Twins and Charlie Shrem are some of the well known individuals that control large volumes of Bitcoin. While Fortress Investment Group and Pantera Bitcoin Fund are examples of group whales.

Majority of the whales that we have today are early adopters who invested a lot of funds to purchase Bitcoin and cryptocurrencies when prices were still low. The Winklevoss twins invested $11 million, a small part of what they received as payout from Mark Zuckerberg over a Facebook intellectual theft lawsuit. This afforded them 100,000 Bitcoins, the current value is estimated to be over $1.1 billion.

Do Whales Manipulate the Market?

Most whales are hodlers, therefore are expected to keep their investments for a long time, especially as Bitcoin seems to retain so much upside potential. However, from time to time, since the blockchain network is open and everyone can view the transactions that go on, we see huge volumes being traded. Apart from that, whether in the buying or selling direction, the trades of these whales always have an impact on the market.

Smaller traders most often seek to ride the trend on which whales are trading. Therefore, when these trades happen, the market seems to follow the whales. This is one major way how whales are affecting the cryptocurrency market. They determine the direction.

This kind of behaviour has caused some suspicion within the industry with people accusing the whales of manipulating the market. Although this behaviour is frowned upon, it isn’t technically breaking any laws. A typical scenario illustrating this is when whales initiate a massive sell-off of Bitcoin or any other crypto. Smaller traders will follow suit after the price has dropped. Afterwards, the whales buy back their crypto at a much cheaper rate, making a lot of money in the process.

However, it is also fair to realise that most of these whales are long term investors who are astute hodlers of Bitcoin and cryptocurrencies. Therefore, we cannot always accuse them of manipulating the market, even though they have the capacity to do so.

How Can You Trade Like a Whale?

What we should be concerned about is if there will come a time that these whales will want to recoup their investment. Would there be a massive sell-off of Bitcoin and cryptos, and how will it impact the market? Well, the Bitcoin and cryptocurrency market is still young, and we expect the system to last for a very long time before any such thing can be anticipated.

Whether there are whales in the market is not a question. Also, whether their actions have any impact on the market has also been established. What traders like to know is the heartbeat of these major stakeholders in the industry. This could serve as a fundamental factor in determining what to expect from the markets. Real time prices and market capitalization with respect to volume are areas where we can determine which way the whales are moving.

The tap platform which serves as a seamless and speedy trading environment gives any trader the opportunity to follow the whales. By this, we mean that when the market moves at its usual fast pace, especially when the whales get involved, many traders are left chasing dust. This is usually as a result of delays in order execution on exchanges. The case is different with tap. 

Trades are instant and seamless, providing traders with the most competitive available prices in the marketplace. Hence, having figured out how whales are affecting the cryptocurrency market, all you have to do is to keep up with them. And that you can achieve by trading on the tap platform.