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Author: Tobias Vilkenson, CoinTelegraph; Compilation: Baishui, Bitchain Vision
What is a Bitcoin whale?
Bitcoin whales are individuals or organizations with large amounts of Bitcoin that are able to influence the market through trading strategies.
The term “bitcoin whale” is often used to mean holders who have a large number of bitcoins compared to smaller players, who are often referred to as “little fish” in the market.The owner of a wallet or wallet cluster controlled by an entity may be an individual or a group that is gathering funds for large investments.
Their large amount of assets are accumulated through mining, early stage investment and other methods.Whales can hold large amounts of Bitcoin, which gives them the ability to manipulate the market by buying or selling large amounts of assets that cause price fluctuations.In the cryptocurrency space, a large number of whales and extreme volatility are often associated.
How much money can cryptocurrency holders make?
If a person or organization owns a large amount of Bitcoin, it is considered a “bitcoin whale”; however, the threshold for this classification has not yet been set.The widely recognized Bitcoin whales are 1,000 BTC.Cryptocurrency analysis companies such as Glassnode often refer to this threshold when identifying network entities (address clusters) with at least 1,000 bitcoins.
As of March 2024, Bitcoin ownership distribution is highly concentrated.Only three Bitcoin addresses hold between 100,000 and 1 million BTC, with a total of 577,502 BTC.The next 108 largest owners have a total of 2,437,765 BTC, with individual holdings ranging from 10,000 to 100,000 BTC.These 111 richest addresses account for approximately 15.34% of the total Bitcoin supply.
Why do Bitcoin whales affect the market?
Whales have a significant influence on their market dynamics.The large amount of Bitcoin they hold gives them the ability to influence the supply and demand of Bitcoin, which triggers price fluctuations in transactions.When whales increase their Bitcoin reserves, prices tend to soar, and selling some of the Bitcoins can cause prices to fall.
By holding large amounts of cryptocurrencies, crypto whales can create scarcity, which drives up demand and value.Large-value trades by whales can trigger significant price changes, thereby guiding the actions of other traders.
These whales often operate in the public eye and their wallets are tracked by a wider trading community.Therefore, as traders follow up, their trading decisions or expected trends may trigger significant price changes.
Some Bitcoin whales choose OTC (OTC) cryptocurrency trading to minimize the impact on prices, while others use exchanges to manipulate the market by sending large buy or sell signals.
What trading strategy does Bitcoin whales use?
Crypto whales stand out from the average investor because they have a long-term vision of the cryptocurrency market and often use advanced investment strategies.
Market manipulation
Large Bitcoin players occasionally participate in a pull-up sell-off program, which is to buy a large amount of Bitcoin at one time to push up its price and then sell it at profit, causing losses to other investors.
Additionally, they may spread rumors on social media to raise interest and push up prices to attract smaller investors to join.Bitcoin whales will eventually sell off, causing prices to fall and causing losses to small investors.
accumulation
Whales can gradually accumulate Bitcoin by making planned purchases at low prices or during market downturns.Over time, they took advantage of the opportunity to buy large amounts of Bitcoin at a discounted price, thus increasing their holdings of Bitcoin.
Long-term holding
By holding Bitcoin for a long time, whales can protect themselves from inflation or profit from the possible long-term growth in Bitcoin’s value.
diversification
In addition to Bitcoin, some whales also diversify their cryptocurrency holdings by investing in other digital assets to diversify risks and gain potential profits from various areas of the cryptocurrency market.
Short-term and long-term strategies
When Bitcoin whales predict price declines, they can use short-term strategies to sell cryptocurrencies in large quantities, scaring away small investors and further depressing the market.
Instead, they can use long-term strategies to strategically acquire Bitcoin over time, which will create positive momentum and encourage smaller investors to join the market, thus pushing up prices.
Stop loss strategy
Stop loss strategies include intentionally manipulating the price of Bitcoin to trigger stop loss instructions from other traders, allowing whales to buy at a lower price before the market rebounds.
How to discover bitsCoin whale
Whales often transfer funds secretly, using innovative methods to hide their identity and the amount of funds they own.Nevertheless, the transparency of blockchain and various whale alert platforms makes it possible to identify these whales.However, identifying them requires in-depth blockchain exploration and vigilant monitoring, known as on-chain analysis.
Here are some ways to spot Bitcoin whales.
Search for bulk transactions
To gain valuable insights and make informed investment decisions, traders and investors can closely monitor the behavior of large Bitcoin holders—a process known as “whale watching.”
Large transactions made by whales often lead to sudden price drops or rises.When a large amount of cryptocurrencies move, it is usually due to these whales transfer between wallets or exchanges.Bitcoin’s public distributed ledger can help access all whale transactions and identify large amounts of bitcoins being transferred.
