A study tends to prove this more than half of all Bitcoins available on the market are held by less than 0.1% of crypto wallets. But who are these great owners? Some are known and do not hide it, while others seek discretion or keep the mystery.
What are whales?
In the crypto ecosystem, the English term “whale” or “cryptobalena” 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 token is not a whale. In fact, if the digital asset has a low capitalization, it will not allow the holder to have the title of “crypto whale”. While this whale status is subjective, it is believed that since a person is able to raise or lower prices on his own, on a highly capitalized project, he is truly a whale.
The Whalestats website tracks the 5000 largest ethereum wallets on the market.
Who are these “cryptographic 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 one “. These are wallets that have not had any assets since 2011. The money in these wallets is generally lost forever. Probably due to the loss of the private key by its owners.
- The “traders”. These are the most active whales who will regularly buy and sell Bitcoin or altcoins on the market.
- “Miner / early adopter”. These are early stage investors. Those who bought cryptocurrencies for a pittance five or ten years ago. Their business is relatively low in the market as many of them have already secured their earnings.
- The criminals “. Initially, Bitcoin was the go-to cryptocurrency for all transactions related to various illicit trafficking, especially on 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. And for this some whales will sell their goods in very small quantities. Sometimes for a long time to avoid drawing attention to oneself.
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 its influence. The big ones are getting bigger and bigger at the expense of the “small” holders of cryptocurrencies.
What impact do they have on the market?
Due to the concentration of wealth in a few hands, their immobility as well as their movements can be problematic. In the first case, when cryptocurrencies are inert on an account, this mechanically reduces the liquidity of the cryptocurrency, because there are fewer tokens available in the market.
When a whale engages in a so-called “spill” movement of its assets, investors will be on the alert as prices will change. These typically track average exchange inflows or the average amount of a specific cryptocurrency deposited on exchanges..
The Whale Alert site allows you to monitor and notify in real time via twitter of a movement on the most important cryptocurrency wallets on the market.
Conclusion: whales VS minnows
Whales are not necessarily ferocious predators in the crypto ecosystem. Many whales are even idle wallets. However, these whales have the common point of being able to create volatility on a cryptocurrency.
The real precaution to take isavoid positioning yourself on projects where the tokens are only distributed among a few whales. In this configuration, whales can take advantage of it to generate maximum profit at the expense of small fish investors.