Who are “whales” and how they can affect the crypto market?

Digital coin quotes often react to the actions of large cryptocurrency holders. Why is this happening and are crypto investors able to manipulate the value of assets?

The term “whales” refers to investors who are large holders of cryptocurrency. For example, they include the automaker Tesla, which owns 43 thousand bitcoin worth $ 1.7 billion, as well as the software maker MicroStrategy, which owns 92 thousand digital coins worth $ 3.7 billion at the current exchange rate .

The actions of the “whales” can often lead to various events on the crypto market. The recent drop in the price of bitcoin to $ 30,000 came as rumors circulated on Twitter that Tesla was selling digital coins.

Tesla CEO Elon Musk later denied this information and said that the company has not sold a single digital coin since March this year, when it recorded a cryptocurrency profit of $ 101 million.

Behavioral factors and manipulations

Large cryptocurrency holders are usually asset managers and investors who are active in traditional markets, have investment experience, and understand market trends, explained Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service.

“Roughly speaking, these are people with a great professional and expert background,” he said.

Small investors are trying to track the movements of “whales“, since large holders of cryptocurrency act professionally and choose investment options with the lowest risks of getting losses, said Sergey Kuntz, co-founder of the 1inch Network decentralized exchange.

Therefore, if whales suddenly sell off cryptocurrency, then this is a signal to the rest of the market that the rate is expected to fall, Soshnikov added. According to him, in the case of the purchase of cryptocurrency by “whales“, the signal will be the opposite.

However, in this case, attempts to manipulate the market cannot be ruled out, the expert warned. One “whale” may have several wallets: from one he sells a large batch, provoking a depreciation, and from the other he buys cheaper, says the director of the cryptocurrency exchange service Alfacash. Also, according to the expert, personal reasons for selling coins for some reason cannot be ruled out.

“Movements in whale wallets can in no way be considered as the only and key indicator of the growth or decline of the market,” added Nikita Soshnikov.

Difficulty tracking

Regular users are unlikely to be able to see the signs of the whales‘ actions in real time, explained Maria Stankevich, Development Director of the EXMO crypto exchange.

According to Maria, it is difficult to assume that large holders of digital coins will carry out transactions on centralized exchanges, instead of selling cryptocurrency without intermediaries.

If we talk about the behavior of the “whales“, then their role in the possible recovery or further fall of the market will be rather secondary, the expert believes. In her opinion, the general news background will be of primary importance here.

“In principle, there is such a theory that there is a very small group of people who own a large percentage of bitcoin and manipulate the market by their actions, but it seems to me that the same Musk has a much stronger influence on the market,” concluded Maria Stankevich.