How whales work in cryptocurrency

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Keith waits until price reaches peak, cancels order and sells some of his assets at an inflated cost. In second case, it creates large order to sell bitcoin at price below market. Panic begins, and ordinary investors massively merge their assets. Keith waits for maximum price drop, cancels his order and buys bitcoin.

In this strategy, main thing is to place orders that can not be executed. For example, if whale puts up for sale 10, BTC at low price, and rest of traders have enough money to buy them back. If traders are unable to redeem entire amount, rest of players will either have to wait for order to be executed, or lower sale price themselves. Playing outside exchange Many experts believe that largest players in cryptocurrency market trade assets on OTC market. This is kind of black market where whales can non-publicly buy huge amount of cryptocurrency.

Non-public trading is conducted in closed groups, through large OTC brokers or on exchanges that offer so-called private bets. Especially popular among whales are brokers who offer their customers prices below exchange and work only with largest players. For example, well-known OTC brokers Circle and Cumberland have introduced limit on admission of new participants: thousand dollars-to enter circle of favorites and thousand dollars — to trade cryptocurrency.

Working through such brokers, whales can buy cryptocurrency from each other and even coordinate their actions. After buying up large number of coins, they go to usual exchanges and move cryptocurrency rate in right direction. From outside it may seem that whales are same pampers only higher level.

But this is not entirely true. Create buzz in cryptocurrency community, manipulate info pods, collect pampas for purchase of coins and so on. Whales are rocking course of cryptocurrency, holders of which they are. Often they also act together, and main goal of most whales is bitcoin. Little-known altcoins do not interest them.

How do whales affect cryptocurrency market? Many investors, having read about whales, think that latter have an extremely negative impact on market and simply take profits from small players. Moreover, conspiracy theories have long been discussed in cryptocurrency community, from which it follows that whales want to either collapse entire market or completely take it into their hands.

But is it really so? For example, this: whales stockpile bitcoin to control market after end of mining era. According to estimates, in years all BTC will be mined, and developers will have to transfer network to PoS-mining. This means that largest holders of coins will manage market. Whales, that is. Many believe that winter collapse of bitcoin was provoked by whales. They are already preparing for PoS-mining and drowning cryptocurrency to buy as many coins as possible.

However, due to collapse, huge number of users left bitcoin community, and many potential investors simply did not enter it, waiting for next fall. Bitcoin went into downtrend, and it hit not only ordinary traders.

Whales benefit from cryptocurrency being in demand and having largest possible community. When it falls in value, their assets also become cheaper. That is, in long term, it is simply unprofitable for them to collapse cryptocurrency.

On this argument, other hypotheses related to deliberate collapse of market by whales are broken. According to experts, presence of whales is not negative phenomenon. This is normal phenomenon for any market. Large asset holders always set vector of development and unite to guide market. To some extent, whales even have positive impact on market. As long as they are interested in cryptocurrency they hold, they are also interested in ensuring that it does not collapse.

Moreover, many whales the same Nakamoto do not even use their assets in order to lower or increase rate of cryptocurrency. They just keep coins in their wallets, maintaining balance in market. Main thing is to catch wave created by them in time. How can an ordinary investor profit from actions of whales? All experienced traders know that wave from China is an ideal opportunity to enter market. For example, when whale plays for decrease and puts up huge orders to sell cryptocurrency at price below market, rate naturally falls.

The only caveat-it is important to notice whale trend in time. Ordinary investor has two ways how to do it: Monitor movement of funds on largest cryptocurrencies in particular, BTC. You can do this on website www. Any large deduction from balance of purse indicates that whale throws out its assets on market, which means that you need to wait for changes in exchange rate. If it falls sharply, it makes sense to quickly buy cryptocurrency, if it suddenly jumps-to sell. Most obvious signal for investor — deductions are made from several top wallets at once.

This means that, officially, that cryptocurrency value has been depreciated. The whale will remove their sell order after successfully provoking the wave and nimbly buy all the coins available at the low price its wave attained. The whale then does this repeatedly, placing enormous sell orders, making the coin value drop, removing the order, buying for the reduced price, generating successive waves of depreciation until they are satisfied with how much funds they acquired, for the price they wanted.

Firstly, the bigger the ocean is, the bigger the whale has to be to produce a significant wave. If a whale is not big enough for the ocean and tries to place a sell order at such low prices in a market with a lot of buyers, it may end up getting exactly the opposite of what it asked for: that people actually buy the order it offered, with the price it offered.

During the wave span, though, many investors were frustrated, as their bitcoin sell prices suddenly dropped. But the same action would have very different consequences in smaller-sized markets. This is not normally done by lone whales, but by groups of people that, in a collective effort, work together to increase the prices. The group places large buy orders together, increasing the crypto price, and then take advantage of the wave of appreciation to sell their coins for the recently artificially appreciated prices at an agreed point.

Likewise, an identified whale inflation would be a good opportunity for the average investor to sell their coins. Usually, sudden lows caused by whale waves are much harsher than those occasioned by other factors. For instance, many cryptocurrencies price crashed after the China and South Korea bans.

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Institutional investors such as Goldman Sachs are becoming significant crypto investors, but whales have been here since the beginning of digital currency, especially in bitcoin. But who are they? The whale metaphor holds well — these are the largest hodlers holders, in bitcoin-speak of BTC, and most of them surface from time to time. That would be the person or people called Satoshi Nakamoto, who invented the modern cryptocurrency and mined the first bitcoin on 3 January Because we can determine what wallets to store the bitcoin he mined, we can estimate that Satoshi owns about one million bitcoin, though the full extent of his holding is not known.

Any trading activity from these wallets would create a splash throughout the crypto community, since his true identity is the subject of conjecture. At the other end of the spectrum, the Winklevoss twins, Tyler and Cameron, live in the limelight, and through their well-respected Gemini cryptocurrency exchange, specialize in the trading of digital currency, both bitcoin and altcoin, for institutional investors.

For example, whale has 10, BTC. Noticing this, ordinary traders will decide that bitcoin goes into negative trend or even collapses. And they will begin to get rid of their assets. Then whale will return to itself those bitcoins which sold, and will buy additional coins at lowered price. If rate falls to dollars, with this money he will be able to buy BTC. Spoofing attack The main goal is to create appearance of collapse or growth of cryptocurrency. To do this, whale does not even have to throw out its own assets on market.

It is enough for him to place very large orders and cancel them before they are executed. At same time, orders for both buying and selling cryptocurrency are triggered. In first case, whale places large order to buy cryptocurrency for example, BTC , thereby increasing purchase price. Other traders see this and, expecting jump in rate, begin to buy bitcoin EN masse.

Keith waits until price reaches peak, cancels order and sells some of his assets at an inflated cost. In second case, it creates large order to sell bitcoin at price below market. Panic begins, and ordinary investors massively merge their assets.

Keith waits for maximum price drop, cancels his order and buys bitcoin. In this strategy, main thing is to place orders that can not be executed. For example, if whale puts up for sale 10, BTC at low price, and rest of traders have enough money to buy them back. If traders are unable to redeem entire amount, rest of players will either have to wait for order to be executed, or lower sale price themselves. Playing outside exchange Many experts believe that largest players in cryptocurrency market trade assets on OTC market.

This is kind of black market where whales can non-publicly buy huge amount of cryptocurrency. Non-public trading is conducted in closed groups, through large OTC brokers or on exchanges that offer so-called private bets. Especially popular among whales are brokers who offer their customers prices below exchange and work only with largest players.

For example, well-known OTC brokers Circle and Cumberland have introduced limit on admission of new participants: thousand dollars-to enter circle of favorites and thousand dollars — to trade cryptocurrency. Working through such brokers, whales can buy cryptocurrency from each other and even coordinate their actions.

After buying up large number of coins, they go to usual exchanges and move cryptocurrency rate in right direction. From outside it may seem that whales are same pampers only higher level. But this is not entirely true. Create buzz in cryptocurrency community, manipulate info pods, collect pampas for purchase of coins and so on.

Whales are rocking course of cryptocurrency, holders of which they are. Often they also act together, and main goal of most whales is bitcoin. Little-known altcoins do not interest them. How do whales affect cryptocurrency market? Many investors, having read about whales, think that latter have an extremely negative impact on market and simply take profits from small players. Moreover, conspiracy theories have long been discussed in cryptocurrency community, from which it follows that whales want to either collapse entire market or completely take it into their hands.

But is it really so? For example, this: whales stockpile bitcoin to control market after end of mining era. According to estimates, in years all BTC will be mined, and developers will have to transfer network to PoS-mining. This means that largest holders of coins will manage market. Whales, that is. Many believe that winter collapse of bitcoin was provoked by whales. They are already preparing for PoS-mining and drowning cryptocurrency to buy as many coins as possible.

However, due to collapse, huge number of users left bitcoin community, and many potential investors simply did not enter it, waiting for next fall. Bitcoin went into downtrend, and it hit not only ordinary traders. Whales benefit from cryptocurrency being in demand and having largest possible community. When it falls in value, their assets also become cheaper.

That is, in long term, it is simply unprofitable for them to collapse cryptocurrency. On this argument, other hypotheses related to deliberate collapse of market by whales are broken. According to experts, presence of whales is not negative phenomenon.

This is normal phenomenon for any market. Large asset holders always set vector of development and unite to guide market. To some extent, whales even have positive impact on market. As long as they are interested in cryptocurrency they hold, they are also interested in ensuring that it does not collapse. Moreover, many whales the same Nakamoto do not even use their assets in order to lower or increase rate of cryptocurrency.