Crypto Whales: An In-depth Overview

If you have been involved in the crypto space then you have probably heard of the term crypto whale. Although a simple concept it is important to understand as these individuals have a huge influence on the market. 

But don’t worry. In this article, I will be covering all aspects of crypto whales. So without further ado, let’s jump right in.

Crypto whales are individuals or entities that hold a disproportionately large amount of the total supply of a cryptocurrency.

What is considered a crypto whale?

Simply put, crypto whales hold a large proportion of the total supply of a cryptocurrency. The cut-off on what is considered a crypto whale varies. However, in most cases, anyone holding over 5% of the circulating supply is referred to as a whale.

In turn, they have an extremely strong influence over the market. Whether that be price manipulation or governance over the platform.

Moreover, if the coins are unmoved from their wallets it leads to lower liquidity as there are fewer tokens in circulation. Consequently, this leads to greater volatility.

The dark side of crypto whales

Crypto whales and market manipulation go hand in hand. Essentially market manipulation is the artificial influence by bad actors on the market that sways the price. This allows these entities or individuals to profit from the consequences. This can be done in several ways.

Firstly, spoofing is a tactic whereby whales place huge sell orders or buy orders. For example, they can facilitate bearish sentiment by placing a large sell wall that creates the illusion of strong selling pressure.

As a result, retail investors panic sell. Then once this occurs, whales remove their sell walls from the exchange and buy at a lower price.

Secondly, crypto whales can initiate pump and dumps. This is more prevalent with low market cap cryptocurrencies that are easier to manipulate.

In essence, large buy orders artificially inflate the price often initiating short squeezes and bots to initiate buys. Then once the token has reached a significant value they are dumped leaving retail investors with worthless tokens.

Lastly, whales can shape the development of projects. Most blockchain networks utilize tokens that provide the right to govern cryptocurrencies.

Token holders propose changes and the community vote on them. The greater the number of tokens held the more votes are allocated to this individual.

Therefore, if a single person holds a large proportion of the token supply then they can swing decisions in their favor. This can often be to the detriment of the wider community. To learn more about governance tokens, click here to read my previous article.

Tracking whales

Thanks to the underlying technology of blockchains whales can be tracked easily. blockchains are essentially open and transparent databases that store various cryptographic information.

This includes the total amount of tokens held in a wallet. This is all publicly available and can be accessed using blockchain explorers.

Keeping track of whale activity is extremely important in helping you gain an edge. The transfer of funds out of wallets could be indicative of an upcoming market sell-off.

Also if whales are selling it could be related to a fundamental problem with the project. In the worst case, it could be developers performing a rug pull or scam.

Top crypto whale trackers

Etherscan – this Ethereum-based platform allows you to check on-chain information. This includes the number of tokens held, transaction history, and details of the smart contract.

To use this application you simply enter your wallet address in the search bar. You will then find the corresponding smart contract information.

Whale alerts – this Twitter account has over 2 million followers and deservedly so. It offers real-time information on transactions by whales using bots.

As a result, followers can get quick updates without having to use a blockchain explorer.

The largest whales

Satoshi – unsurprisingly the founder of bitcoin itself is considered the largest whale. This pseudo-anonymous individual owns approximately 1 million bitcoin.

They were mined over a few months in 2009 and haven’t been moved from his wallet since. As a result, there has been some speculation over the years on what happened to Satoshi but no evidence has come to light.

MicroStrategy – this Virginia-based software analytics company holds over 120,000 bitcoin. This company was founded by the charismatic Michael Saylor and owns the most bitcoin out of any corporation in the world.

As a result, the company’s stock has been a product of recent speculation rising over 700% during the pandemic.

Exchanges – cryptocurrency exchanges hold a staggering amount of cryptocurrencies to provide liquidity to their order books.

The top exchanges such as Binance, Coinbase, and FTX hold upwards of $5 billion in cryptocurrencies.

Bottom line

As you can see, whales are just individuals who own a large proportion of cryptocurrencies. They can be anyone from exchanges to Satoshi himself.

It is worth noting, that it’s extremely important to keep track of whales as they sway the markets considerably. It’s imperative to use blockchain explorers or set up alerts to gain an edge on the market. I hope you found this article useful and thanks for reading.

Want to learn about crypto nodes? Click here to read my previous article.