Definition of Crypto Whale
A crypto whale is an individual or a large crypto investor that holds a significant amount of a particular crypto asset to be able to move the market with their trades and influence the market price of that currency. Whales have a big impact on cryptocurrency prices and their crypto trading activities sometimes make the market more volatile and unpredictable. However whales add a great value by providing liquidity to the market and help to stabilize prices.
How Do Crypto Whales Make Money
Crypto whales take advantage of their huge crypto wallet holdings to make money in a few ways:
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Crypto Whales Manipulate Crypto Prices:
A crypto whales can influence the price of a cryptocurrency by buying large amounts to inflate the price (pump) and attract retail investors, then quickly sell their crypto tokens for a profit once the price peaks. This is known as dumping. This is a risky strategy and can be illegal depending on the execution.
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Crypto Whales Provide Liquidity:
Whales also act as liquidity providers on decentralized exchanges (DEXs). By providing liquidity, they earn fees on trades happening between other users. This offers a steady stream of income, especially for less volatile cryptocurrencies.
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Crypto Whales Invest Early:
Many whales were early adopters of cryptocurrency and mostly invest during Initial Coin Offerings (ICO) and Initial Public Offerings (IPO). They also hold onto their holdings for a long time since they were much cheaper. This means they can benefit greatly from the overall increase in cryptocurrency prices over time.
- Crypto Whales Trade Arbitrage:
Whales can exploit price discrepancies between different cryptocurrency exchanges. By quickly buying on a low-priced exchange and selling on a high-priced exchange, they can earn profits on these short-term price differences.
- Crypto Whales Stake and Lend in DeFi:
Some cryptocurrencies offer staking or lending rewards. Whales can lock up their holdings to earn interest on them. This provides a passive way to generate income from their crypto assets.
How To Become A Crypto Whale
Becoming a crypto whale requires significant initial capital and a long-term approach. Here are steps to become one fast:
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Start with a Substantial Investment:
Whales hold a massive amount of crypto. You need to bootstrap your initial investments. Be prepared to invest a significant portion of your savings or income to accumulate a large holding.
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Consider Lower-Cost Coins with Potential:
By the definition of a crypto whale, you need to have significant coin holdings to be able to make price shifts. So invest in low mcap projects from KYCed teams to make significant price differences. While established cryptocurrencies might be expensive to acquire a whale-sized stake, promising new projects with lower coin prices might offer a chance to accumulate a significant amount at the ground floor, but this involves a higher degree of risk.
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Focus on Long-Term Crypto Investing:
Whales tend to be long-term holders. The crypto market is volatile, and patience is key. Don’t chase quick profits by constantly buying and selling.
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Diversify Your Portfolio:
Don’t put all your eggs in one basket. Spread your investments across different cryptocurrencies with varying risk profiles to mitigate potential losses.
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Continuous Crypto Education:
The crypto space is constantly evolving. Stay updated on new projects, technologies, and market trends to make informed investment decisions. You can get premium and regular crypto education by checking out our crypto education category.
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Be Cautious of High-Risk Crypto Strategies:
Whales may use complex strategies like arbitrage or market manipulation, but these are risky maneuvers not recommended for beginners. You must mange your portfolio to avoid liquidity from undue greed.
How Whales Drive Down Crypto Prices
Crypto whales hold enough cryptocurrency to significantly impact the market. Here’s how their actions can drive down prices:
- Large Sell Orders:
This happens when Crypto Whales create sell walls by placing large sell orders for their crypto assets. This sudden increase in available crypto tokens can overwhelm small potential buyers, causing the price to drop.
- Short-Selling:
This happens when Crypto Whales borrow crypto, sell it on the market expecting the price to fall, then buy it back later at a lower price to return it and pocket the difference. This initial sell-off puts downward pressure on the price.
- Spoofing:
In this manipulative tactic, crypto whales place fake buy orders to create an illusion of high demand, then quickly cancel them and place large sell orders, driving the price down after artificially inflating it momentarily. The initial price increase places then on profit after selling off.
- Panic Selling:
This happens when people notice whale addresses with huge assets are involved in large selloffs, their actions can spark fear among other investors. When whales sell, it can be misinterpreted as a sign the market is about to crash, leading to a wave of panic selling from others, further driving down prices.
- Loss of Confidence:
The crypto market relies heavily on investor confidence. If crypto whales are seen as selling out, it can cause a general loss of confidence in the market, leading to a broader sell-off and huge volatility and price decline.
How To Track A Crypto Whale:
Tracking crypto whale wallet addresses can help you see what whales are buying but it can be a tricky process. Here are methods to identify crypto whale wallet addresses and their activity:
- Using Blockchain Explorers to Find a Crypto whale:
Platforms like Etherscan allow you to explore blockchain data, including large transactions. By filtering for high-value transfers, you can identify potential whale addresses. Blockchain explorers like Ethplorer has a tool that lets you get email notifications each time a particular address does a crypto transaction.
- Use Crypto Whale Tracking Tools to Find a Crypto whale:
Services like Whale Alert and DexCheck provide alerts for significant cryptocurrency transactions, potentially revealing whale activity if you turn notifications on.
- Using On-Chain Analytics Platforms to Find a Crypto whale:
Nansen offers advanced analytics to track whale wallets, analyze their holdings, and identify trading patterns. However, these platforms often require subscriptions.
- Using Top Token Holder Lists to Find a Crypto whale:
Some block explorers display the top holders for a specific cryptocurrency. This can reveal whale addresses for that particular coin. Dexscreener is a free tool that shows top holders of each coin from which you can track their wallet activities.
- Using Whale Movement Tracking tools to Find a Crypto whale:
After identifying potential whale addresses, use blockchain explorers or portfolio trackers like DeBank or Zerion to monitor their transactions. This can provide insights into their buying and selling habits.
Who Are The Biggest Crypto Whales?
Well-known figures, major players and entities are considered as the biggest crypto whales however, some behind the scene players still make big pseudo moves:
- Satoshi Nakamoto: The mysterious creator of Bitcoin is believed to hold around 1 million BTC, potentially making them the biggest whale with a staggering value.
- Institutional Investors: Companies like Blackrock, Tesla and MicroStrategy, with their significant Bitcoin holdings, represent a new breed of whale, influencing the market differently than individual investors.
- Crypto Exchange Leaders: Changpeng Zhao, CEO of Binance, and the Winklevoss twins, founders of Gemini, are prominent figures holding substantial crypto assets.
- Other Notable Whales: Venture capitalist Tim Draper, investor Michael Saylor, and Ripple co-founder Chris Larsen are also major crypto holders.
Originally posted 2024-04-14 09:03:23.
