What is the meaning of "Whale" Cryptocurrency?
The term "whale" or crypto whale is often used in crypto scenes to describe bitcoin or wallets and other crypto addresses that store large amounts of coins or crypto tokens. The ocean serves as a metaphor that is suitable for the entire market, because it is home to large and small fish. In addition, waves can be understood as market movements and news / announcements as fish feed.
Dolphin Bitcoin or Whale Bitcoin?
The exact definition of how much bitcoin addresses must be to be whale is spongy, which means that the use of the term whale Bitcoin is often misused. Real Whale Bitcoin was not found in the cryptto exchange and they did not order 1,000 BTC. Even though this number is quite large but it is not in accordance with the actual largest sea animals. This number is more like the dolphin / Bitcoin dolphin, on the other hand, small fish have taken a more significant role, but not whale. The fact is that there are players who are bigger than the Bitcoin dolphin. Actors who do not participate in the Bitcoin market through a web interface offered by exchanges and small fish (retail markets).
Whale Bitcoin Actually
Whale Bitcoin is actually a player who buys and moves hundreds of thousands of Bitcoins. This usually happens quietly and strategically under special agreements with crypto exchanges, out of reach of small fish. This is not to influence Bitcoin prices and cause orders to decrease short-term prices or price explosions and to buy blank order books. These big players are hedging funds and Bitcoin mutual funds. So they are companies like Pantera Capital, Coin Capital Partners, Falcon Global Capital and many more.
Does the Bitcoin Whale Manipulate the Market?
With large capital, institutions can move the market at will. This is where the whale Bitcoin metaphor belongs to itself because every other sea creature only has to avoid it or is forcibly moved in the direction targeted by whale. In addition, there is no current strong enough to divert the whale from its path in the short term, so the intention is the way, at least in the short term.
Bitcoin Liquidity - Buy low, sell high!
"Injection", for example, 50,000 BTC during the week can cause massive price changes. However, the purpose of whale is to buy low and sell high, as do small fish. In other words, to make a profit after each investment.
Current 1 BTC purchases and split-second sales will then result in trading losses due to the difference between buy and sell prices.
So, if you buy 10,000 BTC at a time, assuming that the crypto market can absorb that amount, it will not only change market prices but also trigger demand for orders on the road and allow many participants to make higher-level profits.
Therefore, large market transactions are suitable for leaving the store but not for their initiation, because the effects of the spreads and triggers of the inhibiting importers reduce the net impact of large orders on the market. Instead, the biggest players need to surprise and darken their market entries by splitting large trades into hundreds or thousands of small orders and then dropping them to the market for hours, days or weeks.
How Bitcoin Whale Affects the Market
Suppose the desire of funds is to maximize profits from every major trade that starts. Here, small fish (small investors) play an important role, because they swim in this trip. Therefore, it is very important for the fund to set a strategy in front of the trading plan and correctly assess the market environment to see which direction the current chart will move.
After the opportunity is identified, the task is to 'massage' the market and direct the participants in the desired direction. Institutional actors thus achieve a higher return on investment.
The strategy described above is the standard practice of hedge funds. Large banks, market makers for most foreign exchange markets, have a large team of traders who do nothing but implement such strategies and trading plans. The duration of the implementation of these plans can then vary between days and weeks.
That is why the Bitcoin Market for "Whale" is very interesting
The Bitcoin market has several features that are ideal for high-risk institutional investors such as hedge funds:
- Low market capitalization- Participants who are relatively naive- There are no banks as competitors- No or almost no rules
Some of the institutions listed above have only been active in the Bitcoin market for the past two years. Although it doesn't make sense to talk about collusion, it seems rational that big players must (at least sometimes) coordinate their actions. Given that there are community members who are known to hold large amounts of Bitcoin, people can imagine that they would naturally discuss their interests and choose with other potential market participants.
So What Can Small Fish/Small Investor Do?
So Whale Bitcoin is not about 1000 BTC orders that you see in the Exchange order book. It's about very big players with extraordinary market power. The BTC market, therefore, dreams come true for speculators and because it is so long in the hands of players who are not big enough to have uniform rules on the market. So the BTC market only decreases because the biggest players control and hold the bait, and so does the horde of small fish.
So the only thing small fish can do is adapt to the movement of the Bitcoin whale and swim as they move forward again. But it's important to recognize when you should keep away from whale, which is when the fish is restless on the surface. It's all a matter of time. Buy low, sell high.
Source: Cryptodiggestnews
