Crypto Whales and Where to Find Them

After participating in the crypto trading community for a while, you may have overheard your investor buddies or influential people in the industry talk about “crypto whales”. You may be curious about what or who the crypto whales are. Why are people so interested in their activities? How can their movements be tracked if they are so significant to the market? In this article, Bitkub Academy will introduce you to crypto whales, their significance, and some methods that crypto investors can use to follow their movements.



What are Crypto Whales?



Whales are commonly known as the biggest creature in the ocean. The term “crypto whales” thus describes people or organizations who possess a large amount of a particular cryptocurrency or have enough funds to make astronomical purchases. Currently, there are no criteria that define how many coins a person or an entity must possess to be considered as crypto whale. However, crypto whales often hold enough coins for them to cause a ripple in the market with each transaction. Crypto whales of Bitcoin include, for instance, Microstrategy CEO Michael Saylor, who has 130,000 BTC, and the Winklevoss twins, who have 70,000 BTC.



Whales have the power to manipulate the market by utilizing their wealth or their massive amount of cryptocurrency. They can create a "buy wall" and a "sell wall" by submitting numerous buy and sell limit orders on cryptocurrency exchanges. The “sell wall'' can cause a cryptocurrency's price to fall since other coin holders will be compelled to lower their asking prices to match the whales' (or else they won't be able to sell). As a result, whales may buy coins for less money. On the contrary, the “buy wall'' can cause a cryptocurrency's price to rise as the numerous buy orders posted by the whales will compel other investors to increase their bidding prices.



Whales are not exclusive to only the cryptocurrency market. Investors can also find the whales in traditional markets or on stock exchanges. For example, Warren Buffet, CEO of Berkshire Hathaway, is regarded as an influential whale of Wall Street. His action of buying and selling can cause volatility in asset prices. In the traditional market, investors may need to spend a lot of effort and time tracking the actions of whales. However, in the cryptocurrency market, it's relatively easier for investors to spot the activities of crypto whales since all transactions are recorded on the blockchain. Investors could monitor wallets that keep a large number of coins and use whale trackers to conveniently receive notifications on the movement of whales.



Why Should Investors Track Whales’ Activities?



Traders and investors often monitor the volume of cryptocurrency flowing in and out of an exchange. When a significant amount of cryptocurrency, like Bitcoin or Ethereum, enters the exchange, the price of a cryptocurrency is anticipated to decline as the supply of coins rises. On the other hand, if a significant number of coins is moved from an exchange to a wallet, the price of a cryptocurrency is expected to increase as there is less supply of coins in the exchange.



On a blockchain, investors can spot significant transactions and look for wallets that are associated with them. If a wallet holds a significant sum of cryptocurrency, like 1,000 BTC, there is a high probability that it belongs to a crypto whale. By monitoring such wallets, investors could better predict the movement of cryptocurrency prices and have a better understanding of the overall market.



However, in many cases, whales may avoid disrupting the market by opting to trade cryptocurrency over the counter instead of trading via an exchange. For example, a whale may send a large sum of Bitcoin directly from one wallet to another, which will send them USDC in return. By performing an over-the-counter transaction, whales can easily trade Bitcoin with less chance of the transaction being discovered by other investors.



Therefore, even if it is simply for speculating the price of one coin, it may be challenging and time-consuming for investors to manually watch whales' activity in order to stay on top of their game. Due to this, a lot of investors opt to use whale monitoring tools to help them identify large transactions and keep tabs on the activities of crypto whales.



Crypto Whale Trackers



Blockchain explorers like Etherscan or Solscan are frequently used by investors as their primary tools for following the movements of crypto whales. On their websites, these blockchain explorers offer both a function which allows users to instantaneously check transactions that have been recorded on the blockchain and a function which allows users to browse the top wallet addresses in terms of cryptocurrency holdings. Cryptocurrency exchanges are typically the largest holders of cryptocurrency. Users can identify them by just looking at the name tags on the wallets. Users may, however, on occasion encounter wallet addresses with few transactions and no name tags. Such wallet addresses most likely belong to crypto whales. Blockchain explorers like Etherscan provide users with options to add wallets that pique their interest to a watchlist. They may then use the watchlist feature to set alerts and monitor transactions to and from those addresses.



If investors do not wish to use blockchain explorers to manually check transactions on the blockchain, they may also use tools that are designed specifically for crypto whale tracking such as Whale Alert. Whale Alert is a service that notifies its users of significant transactions on supported blockchains via Twitter posts. For example, when FTX faced financial difficulties in early November 2022, Zhao Changpeng, CEO of Binance, moved a significant amount of FTT to his wallet. Whale Alert subscribers on Twitter were already made aware of the transaction before Zhao later announced that he was the one behind the said transaction.



Along with Whale Alert, ClankApp is another noteworthy whale-tracking tool. ClankApp does not only offer notification service for its followers on Twitter, but also notifies its users of large transactions via feeds on their website, email, and messaging apps like Telegram. In addition to that, if any investors want to develop their notification system, they can integrate their system with ClankApp’s API, which is made available on its website.



Summary



Crypto whales are people or organizations who hold a significant amount of a particular cryptocurrency. Their actions of selling or buying coins and tokens can cause a massive disruption in the market. Thus, investors frequently track their activities to better understand the movements of cryptocurrency prices in the market. There are a variety of tools available for investors to use for crypto whale tracking. Investors could use blockchain explorers like Etherscan or Solscan to track large transactions by themselves or utilize tools that are made specifically for crypto whale tracking like Whale Alert and ClankApp.



Source:



Cointelegraph, Bitstamp, OKX, Worldcoin, Medium