Crypto Whales, What are They? Let’s Understand!

By  //  April 11, 2022

Cryptocurrency is an interesting yet not understood concept to many even today. Since the launch of Bitcoin in 2009, the idea of cryptocurrency and its investment model has been looming in the global investment market. Many investors have made huge profits through this investment model.

Despite high price volatility and being prone to market fluctuations, this investment model has been able to provide its investors with higher returns on Bitcoin investment. While other investments including stocks, real estate, and gold have been fluctuating to the economic crisis, cryptocurrencies have stood the test.

Even during the global pandemic and countries going into lockdown mode, cryptocurrencies were still able to generate profits. It wouldn’t be wrong to agree that crypto investments have increased in the past two years more than ever before. 

How do you know a crypto whale?

With the growing interest in cryptocurrencies, investors have also been using multiple terminologies to represent various activities of cryptocurrency. Investors are already aware of common terms like blockchain, and decentralized finance among others. Another terminology that is most commonly used in the crypto world is a crypto whale.

What exactly is a crypto whale? In the cryptocurrency market, crypto whales represent those investors who hold a large volume of investments in their kitty. These investors are given this name specifically because their movements in the market will cause an impact on smaller investments and investors. Generally, it is the 80:20 rule applied here. Approximately 20% of investors hold more than 80% volume of the total cryptocurrency in the entire global market. 

Is crypto whale a threat to the global market?

The answer to this question is a Yes. Crypto whales are a threat to the global currency market and may impact the overall demand and supply of cryptocurrencies. These investors also can impact wealth concentration. If the investment is not moved for a long period then the same results in price volatility and reduces the overall liquidity in the global market.

Whales also can create market distortions as most past of their income shall be sold in multiple units. These crypto investments are not going to enter the sale market in one move which will allow for market price fluctuations. 

Now that the concept of crypto whales is clear, let us also look at a few examples of crypto whales in the market. 

Tim Draper

A venture capitalist based out of America, Tim Draper has multiple areas of business and interests to his credit. Tim could be attributed as one of those early investors in Bitcoin. it is understood that Tim had purchased and started storing Bitcoin during its launch days. He purchased Bitcoin while it was priced at $6 per coin. Additionally, it is also worth noting that Tim today holds more than 15% of the overall market supply of Bitcoin. 

Barry Silbert

Silbert is a popular name in the crypto industry and owns more than 75 companies that work on Bitcoin. He is the co-founder of the Digital currency group which in turn owns one of the most popular exchanges – CoinDesk. 

Another two popular crypto whales in the industry are Satoshi Nakamoto and Winklevoss twins. 

Do whales have the ability to inflate the prices of cryptocurrency?

Crypto whales can cash every investor using the tactic for fear of missing out. These investors can inflate the prices artificially by pushing their investment into the global market. They fund using investors’ sentiments by urging investors to raise their bid prices. This attracts the attention of many investors who jump into the chance of missing a profitable deal. Investors feel that prices are naturally increasing and they should fund the same before another increase. In this way, existing investors can make decent profits by selling their existing tokens in the kitty. 

In simple terms, crypto whales create a ripple effect in the overall crypto market. With huge tokens available in their wallets, these crypto whales can increase and decrease the prices of cryptocurrencies using minimal effort. As a regular or small-time investor, you must take a thorough study on the movement of these crypto whales. Instead of falling prey to these investments, you may subscribe to platforms that help you with better market analytics.