Crypto Whales also called big players, or holders of large amounts of cryptocurrency, can have an impact on the market. By buying and selling large amounts of coins, or using other techniques to manipulate the coin market, they can have a significant impact on the market. This guide will describe who Crypto Whales and their impact on the coin market.
The strategies that they employ to influence the coin market and the impact they have on the price of different coins will be explored. Continue reading to learn more about Crypto Whales, and how they impact the market.
Whales, in simple terms, are a group of individuals who work together to own a large share of one coin. The large investors, such as Hedge Funds or Bitcoin Investment Funds are the most common. These players can manipulate a coin’s price to the desired level.
The following funds are currently active on the market: Pantera Capital (Bitcoins Reserve), Binary Financial (Coin Capital Partners), Falcon Global Capital (Fortress Bitcoin Investment Trust), Global Advisors Bitcoin Investment Fund, Bitcoins Reserve and Bitcoins Reserve.
Anyone who has been trading cryptocurrency for a while must be familiar with the word Whale. When you notice a sudden drop in the price of a coin, some people blame whales who are dumped on the market. Think about the fact that whales are the largest creatures in the sea and could probably beat any other fish. The crypto market is no different.
Whales are hedge funds or investment funds with a high percentage in a coin’s volume. Whales can manipulate a coin more easily if it has a smaller volume.
Whales’ movements can create waves, and you can also ride these to make some money if you’re careful. You must be careful, because a whale is just as likely to crush you.
When to Use Crypto Waves
According to popular web site babypips.com , spotting a whale early could allow smaller traders to go along for the ride and profit alongside the whale as well as avoid being crushed by the whale and being left with losses.
You should be patient and wait until the whale appears before you go long. Here are some signs that you can use to identify a whale.
Increase in bid size
For instance, let’s say that a normal order book for a coin has the average bid size 1,000 and average ask size also 1,000. If there is a whale on the market, the order book would change, and the average bid size would rise enormously by more than 500 times.
Price and volatility increase during quiet periods
If a coin has been trading within a narrow range in a recent period and all of a sudden there is an unusual increase in volatility and price spikes upwards, there could be a whale or whales in the house.
Acceleration of buying volume versus selling volume
In a normal market, you’d usually see volume split evenly between the bid and the ask orders. This means 50% of the volume is buyers and 50% of the volume is sellers. If price is an uptrend, buyers may be 60% of the volume, while sellers are 40%. And vice versa, if price is in a downtrend. But if a whale is in the house, you’ll see an acceleration of volume on the buying side. For example, if 90% of the volume is on bids within a short window of time, there’s probably a whale there.
Orders for large quantities of goods are suddenly canceled
If you see large bid sizes starting to quickly disappear in the order book, there might be a whale in the house who is about to take a massive dump (sell in large quantities).
Price momentum is strong
When a coin has skyrocketed in price in a short amount of time, it’s considered to have very strong momentum. But it’s very likely that this momentum will quickly disappear just as fast as it appeared. Why? Because the price was probably not driven by any new material information or real news, but due to a whale in the house driving up the price. Once price has reached a certain level, the whale will stop eating (buying large quantities) and will want to take a massive dump (sell in large quantities).
Volumetric acceleration of a very high order
If there is a sudden surge in volume and the amount of trading volume is abnormally high relative to recent volume (e.g. 3x larger than usual); there might be a whale in the house.
It is important to note that whales don’t always buy coins the traditional way through exchanges. It is possible for them to use Over the Counter Trading or Dark pools. In this way, they are able to buy large sums of digital currency far from the watching eyes of the public. They are doing this because they do not want others to spot the early signals and that the market is getting manipulated.
Someone posted a limit-order in 2014 to sell 30,000 Bitcoins for $300 per bitcoin. This was well below the price of the crypto currency that had traded throughout the weekend, which sat around the 300s. A large order like that in the still-new market spooked it, and sent prices plunging down to levels last seen back in November 2013.
Bitcoin traders immediately dubbed the seller as “BearWhale.” The name spread quickly on social media. Although he lost the fight – after a pattern was seen in the Bitcoin price chart, the order was canceled – cryptocurrency enthusiasts have begun mythologizing the event. They’ve created artwork and poems in his honor. They are proud to have fought this bearishness and no one knows why he was created.