Manipulation power of crypto whales and their impact
Manipulation power of crypto whales and their impact
Crypto

Manipulation power of crypto whales and their impact

By Guest post - 6 Aug 2022

Chevron down
Listen this article
download

Sometimes, when the BTC price falls or rises, traders called bitcoin whales are thought to pump or dump the crypto market. Bitcoin whales are groups or individuals who hold huge amounts of BTC and are believed to be manipulating market prices with huge buy and sell transactions. Even though the market power of whales has waned as more people own Bitcoin and the value of the cryptocurrency market has risen over the years, whales remain important in this market. The crypto movements of whales are still newsworthy.

Whales are generally dangerous as they are the largest fish in the ocean and eat small sea creatures. Crypto whales are likewise notorious for eating small traders, so to speak. The more a whale owns the total supply of a cryptocurrency, the larger its sphere of influence. For example, if a crypto whale owns 15% of the total LINK supply and is determined to sell these tokens, the LINK price will definitely be strongly affected.

Bear whale

In 2015, just a few years after Bitcoin was invented, a huge BTC whale hit the market. As we mentioned, in the past, the effects of whales were very high in low-liquidity markets. The whale probably hoped that selling 30,000 BTC at $300 each would lower the price. Other investors, who took advantage of this sale order, bought the BTCs sold by the whale and continued to buy for a while. As a result, the Bitcoin price rose as high as $400 in the same month.

Whales can manipulate the market without trading BTC

Bitcoin whales are also notorious for bluffing. On cryptocurrency exchanges, buy and sell orders can be created at different prices apart from the spot price. Whales who want the Bitcoin price to go up or down can build a wall at a target price by entering a very hefty trade order on very high-volume exchanges like Binance, FTX, OKX, or Coinbase. For example, placing a 3,000 BTC buy order at a price lower than the spot price could create a support point for Bitcoin. If the whale is indeed bluffing, it will cancel the trade order when the BTC price approaches the order level.

How much crypto do whales hold?

Cryptocurrency whales often have huge amounts of crypto. 85 Bitcoin wallets currently hold about 15% of the BTC in circulation. 8 million BTC, which corresponds to almost 42% of the circulating BTC amount, is also found in the 2200 wallets holding the most BTC. That’s 185 billion dollars.

Whales like to buy and sell manipulative and volatile cryptocurrencies like Doge and Shiba Inu for short periods of time. While 27% of the total amount of Doge in circulation is held in a single wallet, the 15 wallets holding the most Doges hold 50% of the circulating supply.

Is Tesla a Bitcoin whale?

Bitcoin was trading at $38,800 when Tesla announced on February 8, 2021, that it had purchased $1.5 billion worth of Bitcoin. After Tesla’s public announcement, the Bitcoin price gained almost 50% in just 14 days and rose as high as $57,650.

On July 21, 2022, Tesla announced data for the second quarter of 2022. According to this statement, Tesla sold 75% of its BTC holdings in the last three months. Although Tesla’s statement caused a price drop instantly, the market came back to the same level afterwards. Tesla is a Bitcoin whale, but Elon Musk’s speculative posts using many meme tokens, especially Doge and Shiba Inu, have reduced Tesla’s influence in the crypto market.

Exchange to wallet transaction

Bitcoin whales use cold wallets to store their funds as it is a much safer and more secure solution. The large amount of crypto sent from the exchange to the wallet indicates that the whale does not want to sell that crypto in the near term. If the crypto being withdrawn to the wallet is a stablecoin, this is negative for the Bitcoin price because the whale chose to stay in cash rather than buy Bitcoin.

Wallet to exchange transaction

This is also important if a Bitcoin whale sends BTC from the wallet to the exchange. Cryptocurrency exchanges are the most popular platforms for crypto trading. If a whale sends their BTCs to the exchange wallet, it can be considered that they intend to trade them in the short term. And again, there is a different situation for stablecoins. The sending of a large number of stablecoins to the exchange wallet suggests that a whale is preparing to buy a different crypto.

How to track whales

Whale Alert is a Twitter account known to crypto followers. This account instantly shares large crypto transfers that happen within blockchains. If the sender or receiver has a known owner of the wallet, the account tags him in the tweet.

If you have on-chain analysis skills and know how to use blockchain explorers, you can follow large crypto whales and their transactions using explorers.

Conclusion

The crypto market does not yet have the controls and regulations that traditional markets are subject to. Although the market is less volatile than before, it is still volatile. Market manipulation is a common issue for whales. You should watch whales and track their transactions, but you should not trade solely on the basis of these transactions. You should always make your investment and trading decisions after doing enough research and using technical and fundamental analysis methods.

We use cookies to make sure you can have the best experience on our site. If you continue to use this site we will assume that you are happy with it.