A study tends to show that more than half of all Bitcoins available on the market are held by less than 0.1% of crypto wallets. But who are these big holders? Some are known and do not hide it, while others seek discretion or maintain mystery.
What are whales?
In the crypto ecosystem, the English term “whale” or “crypto whale” originally designates a whale. That is, an investor who owns a lot of Bitcoins. Nowadays, this qualifier is valid for all cryptocurrencies. It can be an individual, a company or an investment fund.
However, anyone with a large amount of a token is not a whale. Indeed, if the digital asset has a low capitalization, it will not allow the holder to have the title of “crypto whale”. Even if this status of whale is subjective, it is considered that from the moment a person is able to vary prices up or down on their own, on a highly capitalized project, it is indeed a whale.
The Whalestats website monitors the 5000 largest ethereum wallets on the market.
Who are these “crypto whales”?
A study conducted by the Chainalysis platform on 32 wallets that each have at least one million Bitcoins revealed four different profiles:
- The “lost”. These are wallets that have not had any activity since 2011. The money in these wallets is generally lost forever. Probably due to the loss of the private key by its owner(s).
- The “Traders”. These are the most active whales that will regularly buy and sell Bitcoin or altcoins in the market.
- “Miners/early adopters”. These are early stage investors. Those who acquired cryptocurrencies for a pittance five or ten years ago. Their activity is relatively low in the market since many of them have already secured their earnings.
- The criminals “. Initially, Bitcoin was the reference cryptocurrency for all transactions related to various illicit traffics, particularly on the Darknet. Some wallets held by hacker groups or criminal groups are worth several hundred million dollars or hundreds of thousands of bitcoins.
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What are the risks associated with these whales?
These whales can cause a sudden increase in price volatility when they move a large amount of cryptocurrency in one or more transactions. That is why some whales will sell their assets in very small amounts. Sometimes over a long period of time to avoid drawing attention to themselves.
Otherwise, these whales can voluntarily cause a sudden drop in prices. The goal: to then be able to buy back large quantities of cryptocurrencies at low cost. This “manipulation” of the market accentuates their influence. The big ones are getting bigger and bigger at the expense of “small” crypto holders.
What impact do they have on the market?
Due to the concentration of wealth in a few hands, their immobility like their movements can be problematic. In the first case, when the cryptocurrencies are inert on an account, this mechanically reduces the liquidity of the cryptocurrency, because there are fewer tokens available on the market.
When a whale engages in a so-called “spill” movement of its assets, investors will be on alert, because prices will change. These typically monitor average exchange inflows, or the average amount of a specific cryptocurrency deposited on exchanges..
The Whale Alert website makes it possible to monitor and alert in real time via twitter a movement on the most important crypto portfolios on the market.
Conclusion: Whales VS small fish
Whales are not necessarily ferocious predators in the crypto ecosystem. Many whales are even idle wallets. These whales nevertheless have the common point of being able to create volatility on a cryptocurrency.
The real precaution to take is toavoid positioning yourself on projects where the tokens are distributed among only a few whales. In this configuration, the whales can take advantage of it to generate maximum profits at the expense of small fish-investors.
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