The role of whales on cryptocurrency markets

Cryptocurrency markets have become increasingly popular and complex over the years, with more and more retailers, investors and enthusiasts participating in these markets. At the center of a successful market for cryptocurrencies is the role of whales or institutional investors who have a significant impact on the direction of the market.

What are whales?

The Role of Whales

Whales refer to large investors or dealers who have a considerable amount of cryptocurrency. They often have a significant market capitalization, with some whale letters with values ​​in the ten or even hundreds of billions of dollars. These whales can create or break the markets by buying and selling large amounts of cryptocurrency at any time.

How do whales influence cryptocurrency markets?

For several reasons, whales play a crucial role in the design of the direction of the cryptocurrency markets:

  • Market feeling : The purchase and sales activity of whales can significantly influence the market mood. When buying whales, it can increase prices because they are perceived as optimistic for the future prospects of the market. Conversely, it can reduce prices when selling whales when it is overrated the market.

  • Price tipping points : Wale often influence price movements by buying and selling at certain times. These purchase/sales orders can trigger changes to the market mood, which leads to sudden tips or prices.

  • Order flow : The activity of whales influences the order flow, which is the volume of the shops carried out in a certain direction. By influencing the order flow, whales can create a self -controlled cycle that promotes price movements.

  • Liquidity regulations : Wale often offer liquidity to the participants by buying and selling large amounts of cryptocurrency at strategic times. This can help stabilize the prices and reduce volatility.

  • Speculation : Whales can exercise speculative trade, purchase or sale of cryptocurrencies more on hypothetical results than on the current market conditions.

Types of whales

There are different types of whales that have been observed on cryptocurrency markets:

  • Arbitrage whales

    : These whales benefit from price differences between two or more cryptocurrency exchanges so that you can buy and sell high.

  • Market production of whales : These whales offer liquidity to market participants by buying and selling large amounts of cryptocurrency at certain times.

  • Securing whales : These whales use cryptocurrencies as protection against other assets such as stocks or raw materials.

Examples in real world

Several remarkable examples show the influence of whales on cryptocurrency markets:

  • Bitcoin (BTC) : In 2017, a group bought the BTC worth millions of dollars before it started. This contributed to stabilizing prices and preventing a potential collapse.

  • Ethereum (ETH) : In 2020, a whale bought in November 2019, only weeks before the price dropped by over 50%, worth 10 million US dollars worth 10 million US dollars.

  • Cardano (ADA) : A prominent whale investor bought hundreds of millions of ADA in 2018 and 2019, which contributed to promoting adoption and growth of the project.

Challenges and risks

While whales play an important role in the design of cryptocurrency markets, there is also risks with their participation:

  • Market volatility : The purchase and sales activity of whales can create the volatility of the market, which makes it difficult for other investors to make sound decisions.

  • Regulatory uncertainty : The increasing regulatory environment has an impact on the ability of whales to participate in cryptocurrency markets and to create them into uncertainties and risks.

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