Crypto Whales: What are They and Why are They Important?
Crypto whales are one of the most interesting things happening in the blockchain space, and their effect on the volatile market is a topic of discussion. Their power comes from the fact that they hold a lot of tokens on a blockchain network. In this piece, we'll look at what crypto...
Crypto whales are one of the most interesting things happening in the blockchain space, and their effect on the volatile market is a topic of discussion. Their power comes from the fact that they hold a lot of tokens on a blockchain network. In this piece, we’ll look at what crypto whales are and how they work.
Who’s a “Crypto Whale”?
Whales are people, organizations, or exchanges that hold a lot of a certain cryptocurrency’s tokens.
But the “whale” status can be measured in different ways based on the cryptocurrency. But a crypto whale is usually a rich person or organization that moves a lot of cryptocurrency. So, a crypto whale is not something that a normal person can become.
In Bitcoin, for instance, a “whale” is an account with at least 1,000 Bitcoins. Whales like Fortress Investment Group and Pantera Capital are well-known. Satoshi Nakamoto, who is said to have mined more than a million Bitcoins, is another famous whale that has been the subject of a lot of speculation.
Also, because cryptocurrencies are made to protect the names of their owners, it is hard to connect accounts directly to specific people or organizations. Because of this, it is hard to figure out who each whale is, where they are, what they do for a living, what organization they belong to, who they know, and why they are making this transaction.
But by looking at the blockchain records of people who have made their public addresses public, at least some of the people who own a lot of different coins can be found. Some of these people are actually well-known Bitcoin whales.
Who are the big players in bitcoin?
As more people invest in cryptocurrencies and more people use Bitcoin, the number of people who own Bitcoin has become less concentrated. Studies, on the other hand, show that a small group of investors owns a big chunk of Bitcoin. For example, a report from the National Bureau of Economic Research in 2021 says that only 10,000 investors own one-third of all Bitcoins.
Crypto buyers pay close attention to Bitcoin whales because they seem to own a lot of the currency. Their buying and selling can affect prices in the short term.
For example, it is thought that Satoshi Nakamoto, who created Bitcoin, owns one million BTC. Also, the Winkelvoss twins, who were played by Armie Hammer in The Social Network, once owned 1% of all Bitcoin. Exchanges are also said to have big Bitcoin wallets. Even though most of these funds belong to the people who use them, moving money between crypto markets doesn’t have a big effect on the market.
These are just a few of the most well-known Bitcoin whales. There are a lot more. Some other well-known Bitcoin whales include Tim Draper, Barry Silbert, Michael Saylor of MicroStrategy, and Tesla in the past.
What effect do whales have on cryptocurrency?
Cryptocurrencies are bought and sold on exchanges, which are like the stock market because they use a bid system. Because a whale might have a lot of cryptocurrency, any move they make could cause the price to change in a big way.
If a whale makes a large deal, like selling a big chunk of its holdings, “whale watchers” may do the same, which could cause the price to drop by a lot.
Prices can also go up a lot because of whales. For example, the price of bitcoin went up 17% when Tesla said in February 2021 that it had bought $1.5 billion in bitcoin.
How to Become a Crypto Whale?
To be a whale, you don’t have to be crazy rich. Large projects sell their tokens at ICOs for very cheap prices. If you make the right choice, you might grow up to be a whale. This happens if the value of the token goes through the roof, so make sure the project is worth it.
Why are they so important?
Crypto whales are people who have a lot of coins and can move the market by themselves. Due to the concentration of wealth, this can lead to a rise in volatility, which can make small holders speculate and make prices more based on speculation than on fundamentals.
Because they are the biggest animals in the water, they can make waves for smaller fish. This means that if most of a coin’s supply is taken out of circulation, the leftover coins will be worth more. So, if a lot of coins are sold all at once, their value will drop.