What Is a Crypto Whale and How Do They Affect Crypto Markets?

What Is a Crypto Whale?

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. 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.

Understanding Crypto Whales

Large cryptocurrency holders are called whales because whales are very large compared to the smaller fish in the cryptocurrency ocean. Four bitcoin wallets owned 2.81% of all the bitcoin in circulation in June 2023, according to BitInfoCharts, and the top 100 wallets held more than 15% of all bitcoin.

Dogecoin, a meme coin that became popular, is even more centralized. Fourteen addresses accounted for nearly 75% of Dogecoin in June 2023: about 70 billion coins.

These large accounts are closely monitored by the crypto community and investors. It's publicly announced on the Whale Alert website and on its Twitter account if any of the top 100 wallets make transactions.

Another term that has emerged is "crypto minnow." These are wallet addresses that hold very little cryptocurrency compared to their whale counterparts.

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 create price volatility increases, especially when they move a large quantity of cryptocurrency in one transaction. For example, The lack of liquidity and large transaction size creates 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. If the mean amount of coins per transaction rises above 2.0, it means that whales are likely to begin dumping if it correlates to a large number of whales using the exchange.

The price is influenced not only by the inflow mean, but also by the publicity given to a particular whale's transaction. Bitcoin prices only respond to transactions involving large amounts of cryptocurrency when they're publicly announced on Twitter by Whale Alert.

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 that 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 a more 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.

Frequently Asked Questions

Who are the big whales in crypto?

Some of the publicly-known crypto holders with large amounts of cryptocurrency are Sam Bankman-Fried, Michael Saylor, and Brian Armstrong.

What does "whale" mean in crypto?

A whale is someone who holds a large amount of a specific type of cryptocurrency. It could also mean someone who owns large amounts of several types.

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 who are 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 on its Twitter account.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Each individual's situation is unique so a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

Article Sources
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  1. BitInfoCharts. "Bitcoin Rich List."

  2. BitInfoCharts. "DogeCoin Rich List."

  3. Twitter. "Whale Alert."

  4. CryptoQuant. "Exchange Flows."

  5. CryptoQuant. "Whale Dumping."

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