Whale is a term that refers to a person or organization that owns a very large number of cryptocurrencies and has the power to influence the market. The term 'Whale', which means the opposite of the term Minnow used to describe very small investors, has emerged as a metaphor. Accordingly, the cryptocurrency sector is likened to the ocean and large asset owners are described as whales. Investors and crypto communities keep a close eye on such large accounts. Transactions on whale wallets attract attention on social media and forums. At some point, whales cannot trade in traditional crypto markets. This is because the volume of cryptocurrencies they hold is larger than the volume of large order books. Therefore, they trade over the counter (OTC) by buying and selling currencies through their exchange books.
Here are some of the institutional 'Whales' trading in the cryptocurrency market:
- Fortress Investment Group
- Pantera Capital
- Falcon Global Capital
- MicroStrategy
What Is the Impact of a Whale on Liquidity?
In its simplest form, liquidity refers to the ability to convert assets into cash or another asset. Whales have wallets that hold large amounts of cryptocurrencies. They don't move these assets around much, which can cause some problems. Since whales keep their assets in their wallets without using them, they reduce the liquidity of the asset in question. Since they don't trade very often, these assets remain passive.
What Is the Impact of a Whale on the Price?
Whales have the potential to influence the price because they own a large number of cryptocurrencies. They can create pressure because they reduce liquidity and trade in large volumes. When crypto whales execute a transaction from their wallet and it's on a large volume, the price can be highly volatile. In such cases, investors and the cryptocurrency community keep track of these wallets. They look at the average of the amount of money deposited on exchanges and the average of exchange inflows. If the average value of deposits per transaction exceeds 2.0, then whales are considered to be 'dumping'.
Who Are the Famous Whales in Crypto?
Here are some of the most famous crypto whales known to cryptocurrency traders:
- Brian Armstrong
- Changpeng Zhao
- Winklevoss kardeşler
- Satoshi Nakamoto
- Michael Saylor
Brian Armstrong is the CEO of the world-renowned Coinbase. According to estimates, the net worth of the cryptocurrency wallet owned by Brian Armstrong is approximately $3.6 billion.
Changpeng Zhao, known as CZ on social media, is the CEO of the Binance exchange.
The Winklevoss Twins, Cameron and Tyler, came to prominence by claiming that Mark Zuckerberg had stolen social media ideas from them in university. They then invested heavily in Bitcoin in 2012. The twin brothers have more than 70,000 BTC in their wallets. They also founded Gemini, a crypto exchange, in 2014.
Satoshi Nakamoto is the pseudonym used by the person or persons who created Bitcoin. Although it is not known who he or they are, they have more than 1 Million BTC in their wallets.
Michael Saylor is an American businessman and entrepreneur. Saylor is one of the biggest known Bitcoin whales. Saylor owns more than 17,732 Bitcoins.
What Is a Bitcoin Whale and How to Monitor Their Movements (Transactions)?
Bitcoin whales, i.e. individuals or organizations that own large amounts of Bitcoin, are important players in the BTC market. The Pareto principle also applies to BTC whales. According to this principle, 20% of BTC holders are at the top, and they are expected to own more than 80% of BTC in US dollars. It is thought that Bitcoin could suffer because of the whales' influence on the price. For instance, if a whale tries to sell Bitcoins in its wallet, it could cause a lack of liquidity in the market and depress the Bitcoin price downwards. When whales dispose of their holdings in small sales, it can create a panic among small investors and push prices down. This could create a vicious circle in the market.
Whales and Market Cap?
Market capitalization is a statistic that allows us to see the proportion of the value of cryptocurrencies in the market. The value of a cryptocurrency can be calculated by multiplying the circulating supply by the market price. The volume of a cryptocurrency is inversely proportional to the influence of whales. The higher the volume of the cryptocurrency, the lower the power of whales to influence the market. On the other hand, a cryptocurency with a shallow volume may be more vulnerable to the influence of whales.
Relationship of Proof-of-Stake and Whales?
Proof-of-Stake (PoS) is a consensus mechanism used to create new blocks and execute transactions on the blockchain. Whales have a major role in voting on funds on the blockchain. Since whales stake large amounts of funds, they have more voting power. This is why whales have a huge influence on the Proof-of-Stake (PoS) system. For these networks and systems, the presence of whales helps the blockchain grow and follow a stable path. On the other hand, since whales control cryptocurrencies, it can negatively affect the allocation of votes and power.
