Bitcoin Whale: What Is A Wealthy Cryptocurrency Hodler And How To Spot One
What Is A Crypto Whale, And How To Spot One?
If you have developed an interest in cryptocurrencies, it is possible that you saw the therm ‘Crypto Whale' during your research. Don't worry, you did not misread that term. In fact, it is quite common in crypto-related discussions all over the internet.
Simply put, Crypto Whales are people, or groups, that work together in order to stash large amounts of a single cryptocurrency. This often includes large crypto funds, like Bitcoin Investment Funds, or Hedge Funds. By holding significant parts of a single coin, they get the power to influence its price and change it so that it would suit their purposes.
A lot of these funds have made themselves known on the market. Some of the biggest ones include Pantera Capital, Binary Financial, Falcon Global Capital, Global Advisors Bitcoin Investment Fund, Bitcoin Investment Trust, Bitcoin Reservee, Coin Capital Partners, and Fortress.
The therm Whale often surfaces during big price reductions, when the investors usually blame the event on whales. Just like in the ocean, where whales are among the largest creatures, the same goes for the crypto market. The huge hedge funds are trying to get as many coins belonging to a single currency as their can, and this works best with coins that are small in volume.
When the crypto whales start making moves, the market changes and careful investors are waiting for such opportunities in order to make a profit by buying or selling certain coins. However, experiencing losses is just as probable, and likely much easier to achieve.
Riding The Crypto Wave
Spotting the crypto wave is the easiest way for small investors to make a profit together with the whale itself. As long as they are careful, and avoid getting crushed by the whale, they can walk away with more than decent earnings. Those looking to buy altcoins are advised to first wait for whales to appear before making their move.
However, they cannot wait for too long, otherwise, the whales will get everything for themselves. This is why it is important to read the signs and recognize the whales' arrival. But, what signs are announcing them? This is what we will discuss right now.
- Large bids appear — The arrival of a whale can often be expected if the bid size goes through the roof. If a regular order book for some crypto has an average bid size being at 1,000, the arrival of a whale can increase this bid by as much as 500 times.
- Volatility and price go up for no reason — If the coin has been relatively silent and did not experience any changes for a while, but its price suddenly changes dramatically, it is a sure sign that something is about to happen. If there was no big event or a game-changing announcement, it is likely that the whales are coming, so act accordingly.
- Buying vs Selling volume accelerate — When the market is whale-less, the volume is usually pretty evenly split between the buyers and the sellers. The market seeks balance, which is why things eventually become pretty calm. However, when a whale arrives, the buying percentage can go from 50% to 90%, while selling drops from 50% to 10%. The opposite can be true as well, depending on a situation. The point remains — large shifts in the volume definitely means that something big is going down right now.
Now that we have covered the signs for crypto buyers, here are also some that crypto sellers should be looking out for.
- Big buy orders getting canceled — Big orders are not that unusual, and there is always some crypto investor looking to acquire more of a certain coin. However, sudden cancellation of such orders might mean that the price of the coin is about to go down due to a whale's intervention. You must be ready.
- Price gets a strong momentum — After a coin has seen a big increase in price over a relatively short period, this is considered a strong momentum. However, if this momentum suddenly disappears, the price was likely not driven by a big event, news, or new information, but a whale that was intentionally driving it up. After the price reaches a level that the whale is satisfied by, they simply stop buying the coin, and the price goes down due to the lack of further interest from the whale.
- Huge volume acceleration — If the volume surges for no apparent reason, and the trading goes to the moon, it is a sure sign that a whale is approaching. Better sell your coins before it swims away.
Making your crypto trading decisions based on the behavior of the whales can be a good way of making the right call if you know how to read the signs. Sometimes, the signs might be wrong, however, since whales are also known for buying coins in Over the Counter Trading, or by using Dark Pools.
That way, they do their business without the market ever being aware of the change. They do this to trick others and hide the clues of a market manipulation, which is why you must always be ready for any type of change.