The Big-Time Investors Who Impact Markets Massively

In the investment realm, the amount of holdings means a lot. Investors with larger lots have plenty of dominance in the market, so much so that they impact various factors and drive others to make buying/selling decisions. The blockchain space calls such investors “Crypto Whales”. 

They can be either individuals or companies with a large sum of a particular token in their wallets. The amount they hold is massive enough to impact the markets. There are no yardsticks to consider someone a crypto whale. Depending on the market cap and value of a token, an investor can be called its whale.

For example, a new token whose value is very low may consider someone with 10,000 assets a whale. On the other hand, for a crypto like Bitcoin, this number would be much less. Upon delving deeper into this topic, one can know why they make such an impact.

Crypto Whales & Their Impact on Markets

According to one report published in June 2023, four wallets own 2.8% of all the bitcoin in circulation. Dogecoin, a leading meme coin but far lower in value than Bitcoin, has 4 wallets owning over 75% of its tokens. By June 2023, these four wallets owned over 70 billion assets.

Holding massive sums of coins, these wallets become quite popular among other investors. They soon start tracking them to plan their trading. The notion behind this is that if these whales hold numerous tokens, then they’re in for a cause. Most probably, they’ve seen the profitability that others did not. 

Following the same line of logic, investors interpret different messages from the activities of these wallets. If they buy more tokens, the market gets bullish on that crypto. If they sell it, the investors think the asset is probably going to lose its value. Thus, there are several factors on which these big investors have an impact.  

Crypto Whales’ Impact on Liquidity

Whales can affect a crypto’s liquidity level if they don’t use their assets for a long time. To maintain liquidity, markets need a sufficient number of cryptos in circulation, but that doesn’t happen when the whales are sitting on their coins. Since they hold a large number of assets, their inactivity is notable. 

On the contrary, when they use the tokens, the investors get positive messages about the token. 

Crypto Whales’ Impact on Prices

As stated above, crypto prices get impacted based on what the traders are doing with them. If one sells a big lot out of their reserve, then rumors bring down the price of that crypto. Conversely, when they buy more of the same asset, its price tends to increase. 

Sometimes, even the rumors result in price fluctuations. Whales don’t make any transactions but others assume that they’re going to do that. Like the regular trading environment, the crypto space also gets affected by the grapevine. 

Crypto Whales’ Impact on Decentralization

All blockchain networks provide governance rights with their tokens. The more the number of tokens, the more dominance the holder gets. Thus, crypto whales impact the decision-making of decentralized protocols to a huge extent. They can trump others’ stand easily with a large stake. 

They can easily affect the administration of the protocol by being the biggest decision-makers. This essentially threatens the base of decentralization and favors centralization. 

Here’s How Investors Track Crypto Whales

Almost every experienced crypto investor tracks the movement of crypto whales. They do it to ascertain the short-term and long-term price trends. The tracking of whales becomes possible due to the open-source and public nature of blockchain. 

Anyone can track a wallet address and see how many assets it holds. Still, investors should remember that they won’t know who this whale is. They can just know the activities of wallets which could be diverse in nature. Investors can come across the following types of transactions in whale’s wallets.

Wallet to Exchange– Whales may move tokens from their wallets to exchanges. It usually means that they intend to sell a sizable lot which results in an asset’s price drop. 

Exchange to Wallet– When the exchange transfers tokens to a whale’s wallet, it means the latter doesn’t want to sell them shortly.  

Wallet to Wallet– Sometimes, wallets don’t want to create noise with their activities. Hence, instead of sending tokens to an exchange, they send them to another wallet. 

Conclusion

For crypto investors, tracking whales is kind of essential. By doing that, they will get insights into a particular token or the entire market. Thankfully, they don’t don’t have to put lots of effort into doing that. Crypto whales will probably continue to have the same impact on the markets for a long time. 

It’s hard to tell if the impending regulations will change things in this context or not. For investors, it’s wise to keep an eye on both whales and industry updates. 

Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.