It is no longer news that the cryptocurrency market is not stable, unlike the centralized exchange system, It is very unstable and volatile.
There are many factors responsible for this volatility. Among them are the big boys in the system popularly known as Whales.
The whales are capable of procuring or selling a very large quantity or volume of cryptocurrency thereby affecting the market generally.
Defining Cryptocurrency Whales
A whale is an investor who deals with a very large amount of money. Invariably, cryptocurrency whales are
investors that have a very significant large amount of crypto assets.
Also, those that hold a large number of cryptocurrencies by mining, early investors, etc when they
sell a large portion or buy a large portion, it tends to influence the crypto market.
Whales are stakeholders in the cryptocurrency world. Knowing and identifying the whales and predicting right their expected moves correctly will make the.
Traders of cryptocurrency easily decide the steps they must take either to enter a market or sell off their cryptocurrency assets. This is also referred to as “Whale watching”
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A simple guide to identifying cryptocurrency whales
- Social media
Social media has been a game changer in decentralized exchange now. Twitter most especially is
the platform usually used by whales to disseminate their view of a particular cryptocurrency be it Bitcoin, Ethereum, other altcoins, etc. Adding their input about the coin changes, and the state of the market of the particular cryptocurrency.
- Trading trends
The trading trends deal with the pattern at which the price of cryptocurrency moves. This is studied
using candlesticks. When whales made their enormous trades, it impact the price whether to increase
or decrease.
When a higher quantity of bitcoin moves it could possibly signify the presence of whales.
Attributes of cryptocurrency whales
- They hold or possess a large quantity of cryptocurrency.
- Their action or inactions has toiled on whether the price will change or not
Importance of Whale watching
- These have the ability to influence and bring deviation from what you have researched from
your technical analysis.
Whales are relevant in deciding the movement of the market. Also, you need to know that this price movement does not happen more often.
- It influences the decision of investors whether to start selling off their cryptocurrency
assets or to enter the market to start buying assets. - Monitoring whales’ behavior and mastering their act will help you to have forehand knowledge. This will definitely play an important role in determining your choice of investment to make at a particular time.
Do not forget that only one particular factor is not sufficient to make you decide on what you will have to do in engaging enormously in decentralized finance.
Read Also: All You Need To Know On Decentralized Finance (DeFi)
The Negative Of Whale Watching In Cryptocurrency Investment
1. It Toys with your emotions.
To be able to make it in cryptocurrency investments, emotions are a great factor to overcome.
This is Because when emotions set in, you will forget to do your research very well which might
bring about wrong decisions.
You need to know that when wrong decisions are made, you are at risk of losing the profits from your investment even capital too can be lost.
2. Falling to the deceit of whales
The whales themselves are aware of the fact that they are whales and any of their decision has an impact on the market. So, they can manipulate the market thereby making other holders panic buy or panic sell their assets.
For instance, a whale can buy plenty of tokens in order to raise the price and afterward sell them before others could know that they only manipulate the market to their own advantage.
3. Absence of proper market information to the general traders
Cryptocurrency whales have highly sophisticated and detailed information about a particular market or coin. The detailed information may not be known by other traders, thereby making only the whales to be exempted from the casualty of the market fluctuations.
Read Also: 5 Security Tips For Crypto Traders
In the scenario where a token can pump and dump within a short period of time, the whales have the possibility to have access to this information and they will do all to safeguard their resources while ordinary traders may enter
the market at the point the token is dumping.
Final Note
The roles of whales can not be overemphasized in the crypto market, thus it is essential that you watch out for their rare or tricky move to make your decisions. Also, a single factor is not sufficient do have to check for other factors so that you can safeguard your resources from vanishing.