Cryptos are inherently volatile and Crypto Whales further accentuate crypto’s volatility. So who are Crypto Whales? The answer: they are individuals who hold large swathes of coins of a certain crypto asset. They are popularly known as Whales in the Crypto world. Owing to their ownership of large volumes of coins, they are so powerful […]
The post Crypto Whales explained appeared first on ZebPay | Buy Bitcoin & Crypto.
Cryptos are inherently volatile and Crypto Whales further accentuate crypto’s volatility. So who are Crypto Whales? The answer: they are individuals who hold large swathes of coins of a certain crypto asset. They are popularly known as Whales in the Crypto world. Owing to their ownership of large volumes of coins, they are so powerful that they can easily manipulate the valuations of a certain crypto asset.
This in turn results in a volatility in prices of a given crypto asset. Many coins have come under the garb of Whales.
Whales have a unique trading strategy:
they usually put out a massive sell order that is way lower than all the other sell orders put together in the market. All this aggravates volatility in the market, and when there is a price drop, it triggers panic in the markets.
However, Whales pull out of the market only when they have created enough panic. By doing this, they bring the value of the crypto asset, at a level in which they want them to be. Then they go about accumulating more coins at that desired price point. This tactic is also known as “sell wall”.
Another tactic they use is to artificially inflate the price of a crypto asset. In this particular tactic, ‘whales’ deploy huge buy orders on the market at higher prices than what is on the market, which forces bidders to raise the price of their bids. This results in sell orders filling their buy orders.
The idea behind this tactic is to create a ‘Fear of Missing Out’, commonly known by its acronym FOMO, among the smaller group of investors. However, this requires a sufficient amount of capital and expertise, and hence this tactic has not been hugely prevalent in the crypto markets.
Whales often succeed in creating a ripple effect that has a bearing on the investors who have invested in a given token. By inflating and decreasing prices, Whales manipulate markets and bring them in their favour. That’s why if you are interested in crypto trading, you must pay particular attention to the movement of whales. You can readily do so by tracking the Whale alerts on Twitter and other social media platforms. You could even do so by subscribing to various analytics platforms that keep an eye on Crypto prices on your behalf.
In sum, in order to trade profitably, you have to factor in the influence of Whales in your daily trading decisions.