Summary:
A cryptocurrency whale, or “crypto whale,” refers to individuals or entities holding large amounts of cryptocurrency, enough to influence currency markets. Whale status is subjective, defined by owning a substantial portion of circulating cryptocurrency. The community closely monitors whales due to their potential to significantly impact price movements and create price volatility. Notable whales include Tyler and Cameron Winklevoss, Michael Saylor, and Brian Armstrong. Whale transactions are tracked on the Whale Alert website and X (formerly Twitter) account. Whales can affect liquidity and price by holding or moving large amounts of cryptocurrency, causing market distortions. Investors watch whale activities to anticipate market changes, although whale movements do not always indicate selling. Whale influence varies, with actions sometimes unintentionally impacting prices. Tracking whale addresses and understanding their impact is crucial for crypto investors.
What Is a Crypto Whale and How Do They Affect Crypto Markets?
A cryptocurrency whale, more commonly known as a “crypto whale” or just a “whale,” is a cryptocurrency community term that refers to individuals or entities that hold large amounts of cryptocurrency. Whales own enough cryptocurrency to influence currency markets.
Achieving whale status in the cryptocurrency space is subjective, with no set amount that defines the status. The community seems to agree that ownership of a large amount of circulating cryptocurrency qualifies as a whale. Learn how these large accounts can influence cryptocurrency investors and the market.
KEY TAKEAWAYS
- A crypto whale is a wallet address that holds a significant amount of cryptocurrency.
- The community and investors watch crypto whales because they can significantly influence price movements.
- Whales can also create price volatility increases.
- Some publicly-known crypto holders with large amounts of cryptocurrency include Tyler and Cameron Winklevoss, Michael Saylor, and Brian Armstrong.
- Many whale accounts lie dormant for long periods and cause huge stirs in the crypto community when they become active.
Understanding Crypto Whales
Large cryptocurrency holders are called whales because they are much larger than smaller fish in the cryptocurrency ocean. Three bitcoin wallets owned 2.94% of all the bitcoin in circulation in March 2024, according to BitInfoCharts, and the top 110 wallets held more than 15% of all bitcoin.1
These large accounts are closely monitored by the crypto community and investors. It’s publicly announced on the Whale Alert website and on its X (formerly Twitter) account if any whales make transactions.2
A Whale’s Effect on Liquidity
Whales can be a problem for cryptocurrency because they’re high-profile wallets and because of the concentration of wealth, particularly if it sits unmoved in an account. It lowers that specific cryptocurrency’s liquidity when coins sit in an account rather than being used because there are fewer coins available.
A Whale’s Effect on Price
Whales can also increase price volatility, especially when they move a large quantity of cryptocurrency in one transaction. For example, the lack of liquidity and large transaction size can create downward pressure on Bitcoin’s price if an owner tries to sell their bitcoin for fiat currency because other market participants see the transaction. Other investors go on high alert when whales sell, watching for indicators that they’re “dumping” their holdings.
A common sign crypto investors watch for is the exchange inflow mean, or the average amount of a specific cryptocurrency being deposited into exchanges.3 If the mean amount of coins per transaction rises above 2.0, it is believed to mean that whales are likely to begin dumping if it correlates to a large number using the exchange.4
The price is influenced not only by the inflow mean, but also by the publicity given to a particular whale’s transaction. Bitcoin prices appear to respond to transactions involving large amounts of cryptocurrency when they’re publicly announced on X by Whale Alert or communicated by news outlets.
What Crypto Whales Mean to Investors
There are many circumstances in which someone with a large amount of cryptocurrency could move their holdings. It should be noted that movement doesn’t always mean a whale is selling off their holdings. They could be changing wallets or exchanges or making a large purchase.
Sometimes, whales may try to sell their assets in smaller amounts over an extended period to avoid drawing attention to themselves. They can produce market distortions, sending the price up or down unexpectedly. This is why investors watch the known whale addresses to look for the number of transactions along with their value.
Who Are the Big Whales in Crypto?
Some publicly known crypto holders with large amounts of cryptocurrency are Tyler and Cameron Winklevoss, Michael Saylor, and Brian Armstrong. Several unknown whale addresses exist, such as the one that transferred 9,830 ETH to Coinbase on March 23, 2024 ($33.3 million).5
What Does “Whale” Mean in Crypto?
A whale is someone who holds a large amount of a specific type or several types of cryptocurrencies.
Do Whales Manipulate Crypto?
Actions taken by crypto whales are closely watched by investors. Whether they act intentionally to manipulate prices is difficult to say, but they can cause prices to rise and fall because of the interest others take in their holdings.
How Much Is a Crypto Whale?
The definition is subjective and it varies by cryptocurrency. Whales generally hold a large number of coins available for a specific currency.
The Bottom Line
It’s a good idea to pay attention to what the whales are doing if you’re a crypto investor, but movement doesn’t necessarily mean you should panic. Many whales are business owners who have invested heavily in cryptocurrency. These might be the ones worth observing if you’re going to whale watch. Keep an eye on the known whale addresses to track whale transactions and their values. They’re publicly announced on the Whale Alert website and X account.
Link: Learn more about crypto whales, who they are and what effect they can have on the crypto market.
