Crypto Whales and their Role in The Coin Market

Cryptocurrency trading is no longer just for hobbyists or neophytes. In fact, as the industry matures and institutional money begins to flood in, it’s only a matter of time until hedge funds and other big players are making sizable bets. Some experts say that volatility could spike and hurt the nascent digital currency market more broadly when that happens.

Who are the Crypto Whales?

The best way to describe cryptocurrency whales is to be large investors in cryptocurrency usually Hedge Funds and Bitcoin Investment Funds. They’re essentially big players who can influence the price of bitcoin and other cryptocurrencies with their trades. The goal of the whales is to accumulate all tokens in the market; this way, they can influence market prices directly. This influence can be indirect by selling off their large share of tokens or direct by purchasing large amounts from investors and pushing up prices.

The whales are in the water, and active players are now emerging to compete. Grayscale Bitcoin Trust (GBTC) is one of the largest crypto funds with an average of over $28billion (£22 billion) in assets under management, and with some of these funds have announced their presence on the market, a new type of investment experience can emerge. These firms have been investing based on their own insights into the digital currency space. They strongly believe which projects will survive and thrive in this volatile environment.

Other funds that assert their presence on the market may include:

  • Bitcoin Investment Trust.
  • Binary Financial.
  • Global Advisors Bitcoin Investment Fund.
  • Coin Capital Partners.
  • Pantera Capital.

How to Handle Crypto Ripples

Being able to spot whales early could be a game-changer for traders. Spotting a whale on time could allow smaller traders to go along for the ride and profit alongside the whale and avoid being crushed by the whale and being left with losses.

Social Media

The best way to spot a whale is by taking a look at their social media. Twitter is the most popular channel for whales who like to share their trading journeys in plain sight. If you see regular tweets about altcoins, with lots of fish pictures and many mentions of people saying thank you/shout out, I’d say there is a whale planning something big in this community (and you should join them).

Bid Size

It is often the case that a new alternative to Bitcoin will experience an unusual increase in the bid size. A rising tide lifts all boats, and most whales won’t want to miss out on the action, increasing their bids as well. A spike in the transaction price often accompanies these sudden increases.

Volatility in Quite Periods

Suppose you see an increase in volatility and price during a time when there’s otherwise little activity on an exchange. In that case, it could be because someone placed a large order at that level, and someone else saw it and decided to follow suit (which led to more traders following suit).

Parting Shot

As an active participant and analyst in the cryptocurrency space, I’ve noticed many misconceptions about prominent market participants in this space. Most information about these market moves comes from unverified sources or “anonymous” tips. So, without a trusted source of information on who these Crypto Whales are and what they’re doing with their money, let’s go ahead and fill that gap.

While in the crypto market, we are often asked by newcomers’ what is the best coin to invest in?’ While we don’t have a short answer to that question, we know that seeing a whale during a quiet period is good.

Image Source: Adobe Stock

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.