Learn Crypto Series: What Makes a Cryptocurrency Holder a “Whale”?

 

A whale is a term used to describe individuals or entities that hold a significant amount of cryptocurrency. However, there’s no set amount of crypto needed to qualify as a whale—it varies depending on the specific asset. A person is typically considered a whale if they own a large percentage of a cryptocurrency’s total supply and can influence its price with their trades.

For example, if someone holds $1 million worth of a cryptocurrency with a market cap of $100 million, they would be considered a whale because their holdings are substantial relative to the asset’s total value. On the other hand, holding $1 million in a cryptocurrency with a $30 billion market cap wouldn’t necessarily make someone a whale, as their ability to affect market prices would be much lower.

Whale Watching: Should Crypto Investors Follow Whale Moves?

Following the actions of crypto whales can be beneficial for investors. One key advantage is gaining insight into overall market sentiment. Since whales make large trades, their moves can have a significant impact on the market’s perception of an asset.

If whales begin selling large portions of a particular cryptocurrency, it could trigger a loss of confidence among other investors, potentially driving the price down. On the flip side, when whales buy in, it can create bullish momentum, boosting the asset’s price. Keeping an eye on whale activity early on may give you an edge over other investors.

How to Spot a Crypto Whale

Blockchain’s transparency makes it possible to track whale activity, but it’s not always straightforward. Whales often use creative methods to move funds discreetly, masking their identity and the size of their holdings. However, there are a few key indicators to help identify potential whale movements.

One approach is to analyze trading patterns. Whales can cause sudden price surges or drops through large trades. By watching for unusual market activity, you may be able to detect whale involvement.

Another method is using blockchain explorers like Etherscan or Blockchain.com to spot large transactions. Significant transfers of cryptocurrency often signal that a whale is active in the market.

Social media, especially Twitter, can also be a valuable resource. Some whales openly share their market insights, strategies, or opinions on cryptocurrencies. Monitoring their posts can provide clues about whale movements.

While some whales are more public about their holdings, many operate anonymously or spread their assets across multiple wallets to avoid attracting attention.

Related: Learn Crypto Series: Three Key Tips for Buying Cryptocurrencies

3 Tactics Whales Use to Manipulate the Market: Part 1

Pump and Dump:

Whales have the financial power to artificially manipulate prices, and since most exchanges don’t limit token purchases, this tactic is common. Whales begin by making large purchases, driving up the price and creating "green candles" on charts. Sometimes, this buying activity continues for several days.

As demand rises and the market buzzes with excitement, FOMO (fear of missing out) kicks in, and more investors rush to buy. Once the price reaches a peak that whales deem profitable, they start selling off their holdings. The price dips, but many new investors mistake it for a temporary pullback and keep buying, while whales quietly exit the market, leaving others to deal with the crash.

This tactic works particularly well with promising coins. Those who panic-sell may be left with significant losses, while long-term holders who believe in the project may eventually recover their investments.

Whale Tactics for Profit: Part 2

Sell Wall:
The sell wall is a sophisticated tactic that requires substantial funds and a deep understanding of market conditions. This strategy is often used with coins expected to grow significantly over several months. To maximize profits, whales aim to buy in at the lowest prices and prevent the price from rising by placing a large number of sell orders.

How does it work?
By creating a sell wall, whales push the price down and discourage weaker traders from buying. This tactic is frequently employed before significant news events that could drive the price up, allowing whales to later execute a pump and dump strategy.