Crypto whales are individual entities that hold a significant amount of a cryptocurrency, huge enough to cause a big effect on the markets and move the asset’s price. Crypto whales can be a person or an organization.
But, how much is this “huge-enough amount”?
Let’s consider Bitcoin whales. Glassnode, a well-known on-chain analytical firm, provides a very nice and detailed description of different types of addresses based on the number of bitcoins they are holding. Take a look at the image below to see how these addresses are categorized.
Bitcoin Entities – Source: GlassNode
As you can see, any Bitcoin address (entity) with more than 1,000 BTC is considered a Bitcoin Whale. Glassnode also introduces the concept of “Mega Whales”, the addresses with more than 10,000 BTC that are more likely to move the price with their market share.
One important thing to keep in mind is that the Bitcoin addresses related to centralized exchanges or miners are excluded from this list as they have a great Bitcoin supply due to the nature of their business.
Glassnode provides the same numbers for Ethereum whales, however, remember that this is not always the case. The threshold which determines a crypto whale is specific to each cryptocurrency and is determined based on different factors including the market price and the market capitalization.
One more thing that you need to note is that although the crypto space may have agreed on a specific threshold for Bitcoin whales (a whale has more than 1000 BTC), different platforms may set different numbers for other cryptocurrencies.
You should know that whales can exist under the NFTs’ ocean as well. This mostly applies to top NFT collections like CryptoPunks and BoredApes which are priced quite high. Just like a crypto whale, an NFT whale will be an address that holds a considerable number of these major NFTs.
BA crypto whale’s holding is significant enough to change the market price or the current trend. Just like whales, crypto whales make waves as they move, making ripple effects that can move the whole market. And it happens because of an important factor in the young crypto market: Liquidity.
Let’s say you want to sell your crypto and change it to a fiat currency like the US dollar. In a highly liquid market, you would be able to do this quite easily and fast while a market with low liquidity won’t be able to meet your demand, not that quickly at least.
Liquidity and price go hand in hand when it comes to financial markets. Now, let’s see how a crypto whale can affect the market price to its own benefit with a simple example:
Whale A wants to sell Token B at a specific price. The market price is lower now so it has to make the price increase to that target. Whale A has power and market members are watching its movements.
Knowing this fact, Whale A starts buying Token B, trying to increase FOMO (Fear Of Missing Out) in the market. Market members believe that there should be a reason for Whale A’s move, maybe a bull run is on the way, so they follow.
As more people enter Token B’s market and start buying, the demand increases for the asset, and with the supply staying the same, the price has nowhere to go but up. The price of Token B increases, getting closer to the target Whale A has in mind.
Once the price is almost there, Whale A starts selling, making profits as it wished!
Now, you probably have an idea of how a crypto whale can create short-term price movements using its extensive supply of tokens. Crypto whales can also increase the downward pressure on the price by selling their tokens and increasing FUD (Fear, Uncertainty, and Doubt) to increase their supply at a lower cost.
Thanks to the transparency public blockchains offer, crypto whales can easily be spotted and tracked. You can use a blockchain explorer to track any specific crypto address and see its balance and activities.
If you’re not familiar with blockchain explorers, check out our article. We explain in detail what these blockchain tools are and how you can use them to go through a public ledger and explore its data.
Now, let’s check a Bitcoin whale together.
1. On the Bitcoin explorer of your choice, type and search the following address:
1MchKSZg4ETtfxJdhNXrDxg3hp9UAiNZ96
2. Check its current address and you would see that this address is not a whale at all.
Source: blockchain.com
3. Well, it actually was. If you check its history of activities, you will see that this Bitcoin whale was dormant for 11 years! It received 1037.42 BTC in April 2012 when the price of Bitcoin was only $4.90! The whale just moved all its holding to a new address recently. This address is worth more than 30 million dollars at the time of writing this article.
Source: blockchain.com
This is just one way to look into crypto whales. We have different tools right now that would just do the job and notify you once a crypto whale makes a move.
Whale Alert is one of the most known tools you can use. It is a famous Twitter bot that would report crypto whales’ activities through tweets.