Who Are Bitcoin Whales? How Do Whales Manipulate Crypto Market




Bitcoin whales are often the subject of discussion in forums, webinars, or just chats by retail crypto investors because they must always be aware of the whales that will affect the price of Bitcoin and cryptocurrencies. Retail investors often attribute the increase or decrease in the price of Bitcoin, to the sale or purchase on a large scale.

What’re Bitcoin Whales?

In simple language, Bitcoin whales can be interpreted as a person or group of people/institutions who hold large amounts of Bitcoin or cryptocurrency, so that they will be able to control market prices, and often the decisions of the whales will affect liquidity and volatility. Just like retail investors, there are also whales that hold one type of crypto, namely only Bitcoin, there are also whales that hold more than 3 types of cryptocurrencies. For example, a whale holds Bitcoin, Ethereum, and Dogecoin.

Bitcoin Whale Group

In order to identify the Bitcoin whales, we will have to make the categorization or group of Bitcoin whales into four groups such as:

Crypto Exchange: In order to be able to increase their liquidity and trading, crypto exchanges will always try to increase their crypto assets, both from profits and from investments. In a long time so that several crypto exchanges will become the center of the crypto collection, such as Binance, Coinbase, Crypto.com, Kraken, Kucoin, Bitfinex, Okex etc. By the end of 2021 around 10% of Bitcoins in circulation are held on crypto exchanges.

Institution: Many Institutions or companies that hold large amounts of Bitcoin, such as Microstrategy, Tesla, Grayscale, Square Inc, Silvergate Capital, etc.

Individual: In general, individual Bitcoin holders or individuals are rarely known, because in general, they are early investors, who bought Bitcoin at very cheap prices, or before 2014 such as Satoshi Nakamoto,Cameron and Tyler Winklevoss (founder of Gemini exchange)

Bitcoin Mining Pool: It is rare for authors to classify Bitcoin mining pools as whales, but I personally think that Bitcoin mining pools need to be grouped as whales, because they play an important role, such as in transaction fees, and Bitcoin mining, and of course they hold large amounts of Bitcoin, so they deserve to be grouped. as large groups or whales. Examples of Bitcoin mining pools are Binance, Antpool, Poolin, Slush Pool, F2pool, Awesome Miner, BTC Pool.

Effects of Whales on Bitcoin Price

According to observers, until now, most Bitcoins are stagnant or immobile, only stored in wallets. The whales are already planning when to buy and when to sell. Many whales trade as well as retail traders. But if a whale transacts it will shake the market. The wise whales, (there are also naughty whales just looking for profit), if they are going to transact, they will observe and how it affects the market. as did MicroStrategy which already holds over 110,000 BTC. but they buy with a macro buying strategy, where it buys in increments ($20m-$60m) as the Bitcoin price drops 2% to 5%.

Where Do Whales Trade?

There are many ways or methods that whales can use to transact Bitcoin, of course, they have observed market conditions, among the transaction methods that are often carried out by whales are:

OTC (Over the counter): Over-the-counter is a high-liquidity transaction that is more secure and personal. Transactions are carried out outside of ordinary exchanges, especially large transactions by individuals and institutions. there is a bilateral contract in which the buyer and seller agree on futures trading.

Wallet to Wallet: OTC trading is not related to exchanges but depends on privacy, so transactions are more frequent wallet to wallet so it has little effect on market prices, often not even the crypto market. Of course, this transaction is not known to the public, it can only be seen on the blockchain that there have been big transactions between Bitcoin addresses, but it is unknown who they are. unless they make public announcements or social media. The movement of Bitcoin wallets containing above 1000 Bitcoins is often monitored by observers such as Overstock and Glassnode.

Wallet to Exchange: Transfers of large amounts of Bitcoin from wallet to exchange will result in excess supply on the exchange, which often results in the price of BTC going down for a while. but this often frightens day traders and creates selling pressure.

Exchange to Wallet: Withdrawal transactions from crypto exchanges to wallets in large quantities will certainly result in reduced stock on the exchange and if demand remains or may increase, Bitcoin prices will increase, although in general whales withdraw their Bitcoins from exchanges only for the security they store in cold wallets.

Exchange to Exchange: Often the whales make transfers from exchange to exchange because these whales intend arbitrage, so the amount of their Bitcoin transfer is not too big, but the whales only mean to make a profit from the price difference from one exchange to another. Although there is a small effect on the price but I think, no effect on day traders. But because the whales can control the highest volumes it allows the whales to make huge profits.

How Whales Manipulate the Market

There are several tactics or strategies that are often used by whales to manipulate market prices, including:

Sell Wall: in this strategy the whales will make sell orders in large quantities but at a price cheaper than the market price, of course in exchange the Bitcoin price will fluctuate, and other traders will certainly panic and will lower their selling price in the sell order book After the Bitcoin price drops to what the whales want, they will buy Bitcoin with a larger number of Bitcoin units.

Buy Wall: this strategy is the opposite of the sell wall strategy, where the whales make buy orders in large quantities and the price is higher than the market price, of course the price of Bitcoin will rise according to the wishes of the whales.

Pumps and Dumps:. The pump and dump strategy is often used by whales individually, whales will choose the cryptocurrency they will pump, after getting suitable crypto to pump, they begin to act by purchasing gradually of course with an amount that can affect the market price, then they promote on social media, even whales will invite influencers to help promote it after the price reaches the increase they are targeting, the whales will do a dump.

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