What are Whales in Crypto?

A whale is a cryptocurrency term that refers to individuals or entities that hold large amounts of bitcoin. Whales hold enough cryptocurrency that they have the potential to manipulate the currency valuations.

How Whales Affect Crypto

Whales are a big problem for cryptocurrency because of the concentration of wealth, particularly if it sits unmoved in an account and lowers liquidity, which, in turn, can increase price volatility.

Volatility is also further increased if the whale moves a large quantity of say, bitcoin at once. If the seller is trying to sell bitcoin for state currency, the lack of liquidity and large transaction size could put downward pressure on the price of bitcoin, as other market participants see the transaction and also try to sell, creating a fire sale.

Here is an example of this. On Monday, the number of whale entities or clusters of wallet addresses held by a single network participant holding at least 1,000 bitcoin fell to a 5.5-month low of 1,943 on Monday, according to data provided by Glass node.

The metric had dropped by 60, or 3%, in the past five days, extending the decline from a record high of 2,237 on Feb. 7.

The market would then take a deep dive on Wednesday, with Bitcoin dropping below $50,000 following a highly visible tweet from Elon Musk.

Another example is in Ethereum, the world’s second-largest digital currency. ETH reported a spike in its network activity in the last few days amid a record rally in the price of ETH. Crypto whales accelerated the movement of Ethereum this week after a large Ethereum address moved 46,793 ETH worth more than $181 million to cryptocurrency exchange, Binance.

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Nigel Jr.
As a tech enthusiast and expert, Nigel Jr. is dedicated to providing in-depth and insightful content on all things technology. With a background in online journalism, product reviewing, and tech creation, Nigel has become a trusted source for all things tech.

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