As a new asset class, cryptocurrency is unique in the world of investing. One of the most unique attributes is that users can browse the holdings of digital wallets on the public blockchain, meaning that internet-connected crypto wallets show exactly how much of each currency is being held. This gives anyong a looking-glass into the crypto holdings of even the most wealthy crypto investors, giving rise to the phenomenon of “whale watching.”
But what is a crypto whale? And how do they affect crypto markets? And what are some of the places to go “whale watching” online?
We break down the details below, including what exactly qualifies as a “whale,” where to find them in the wild, and how the movement of their assets can cause ripples in the sea of crypto investors.
What Is a Crypto Whale?
A cryptocurrency whale is someone with a digital wallet that holds a large amount of crypto — usually tens of millions of dollars. There are no strict definitions of what qualifies as a whale, but holding 10% (or more) of a specific crypto seems to be the consensus definition of a whale.
That being said, a Bitcoin whale is anyone with 1,000 Bitcoins or more, which equates to over $20 million on Bitcoin holdings, even though that is an overall small percentage of all Bitcoin in circulation.
Whales are not just individual investors, but also investment firms, crypto exchanges, and other businesses that hold a significant amount of crypto. Sometimes they are founders who hold a high percentage of their own company’s token, and occasionally they are simply individuals that have amassed a large percentage of a project’s token.
Whales can move markets, and investors like you and me can study the buying and selling patterns of the largest holders of a given coin to make assumptions about the future of a project.
How Whales Influence the Cryptocurrency Market
Large crypto accounts are considered “whales” in a sea of crypto investors. As the biggest creatures in the ocean, they have the ability to make waves for other, smaller fish. Here are a few ways crypto whales influence the crypto markets:
When a pod of whales own a significant portion of a specific cryptocurrency and hold it in their wallets, those coins are effectively off the market, lowering the overall liquidity of a given currency.
This can cause prices to go higher in times of greater demand as more investors chase fewer available coins. This can also have a negative effect on the value of a currency if a whale decides to flood the market by selling off a large number of coins.
When a whale attempts to sell a large portion of their holdings, there may not be sufficient liquidity in existing markets to keep the price stable, meaning the price may drop significantly.
Large transactions like this are typically done in over-the-counter (OTC) trade desks with large crypto exchanges rather than on the open market, in an attempt to not tank the price of a given cryptocurrency.
But prices can also swing significantly when a whale simply moves their crypto from their wallet to an exchange or vice versa, from an exchange onto their wallet.
When a whale moves crypto from their wallet onto an exchange (also known as exchange inflows), it can appear as them preparing to dump their holdings in exchange for fiat currency or another crypto, which may negatively impact the price.
On the other end, when a whale moves a significant amount of crypto from an exchange onto their wallet (also known as exchange outflows), it can be seen as a bullish sign for that crypto, causing more investors to jump on board.
Overall, the movement of coins to and from a crypto whale’s wallet can have huge implications for the price of a given cryptocurrency.
Why You Should Pay Attention to Crypto Whales
Whales are of interest to investors who want to know what the market will do for a given cryptocurrency. Watching the buying and selling habits of a coin’s largest investors can give insight into where the market may be headed.
Although moving large amounts of crypto may not indicate that a whale is about to dump or go “all-in” on a given crypto, it is still good to know what the biggest players in the game are doing.
In addition, crypto whales may be founders or early investors in a crypto project, and as such, may have insider knowledge as to the future of a project. Watching the acquisition or selling of a certain crypto over time can give a hint of their confidence in a project overall.
There are several tools available to watch crypto whales, the most popular being the Whale Alert website and associated Twitter account. This service tracks millions of transactions on the blockchain and sends out real-time alerts to show large movements of cryptocurrency and where it is going. You can also see the top crypto holders for various coins on the BitInfoCharts website.
Crypto Whale FAQs
Here are the most common questions about crypto whales:
Who Are the Biggest Crypto Whales?
Some of the biggest crypto whales people follow include CEOs, owners, and founders of various crypto projects and crypto-related businesses. These include the likes of Michael Saylor (CEO of MicroStrategy), Sam Bankman-Fried (Bitcoin billionaire and owner of FTX exchange), Brian Armstrong (founder of Coinbase), the Winklevoss Twins (of Facebook infamy and owners of the Gemini exchange), and Justin Sun (owner of Tron blockchain).
Most of these whales don’t share their wallet address and typically split up their holdings, making them harder to track. But Justin Sun holds over $300 million in his Ethereum wallet alone and regularly makes transactions in the millions of dollars.
How Much Cryptocurrency Do You Need to Be a Whale?
To be considered a cryptocurrency whale, you typically need to hold at least 10% of the circulating supply of a given cryptocurrency. For Bitcoin, specifically, you need to hold at least 1,000 Bitcoins, which is the equivalent of about $20 million as of 2022.
Do Whales Intentionally Manipulate Crypto?
There is speculation that whales intentionally manipulate crypto prices in their favor, allowing them to buy at a better price or sell at a much higher price for profit. This cannot be 100% confirmed because no one has outright admitted to manipulating crypto prices.
That being said, through analysis and tracking of crypto whales, there are many who believe whales can enact specific trading strategies to control prices in their favor. One is creating a large sell order that causes a “sell wall” to stop the price of a crypto from rising past their sell order price. Another way is to place large buy orders, which show up on order books and cause investors to jump on board, inflating the price.
So, yes, crypto whales can intentionally manipulate markets, but do they? This is still up for debate.
Crypto whales are an interesting phenomenon unique to the cryptocurrency world. Following the inflows and outflows from wallets that hold millions or even billions of dollars worth of crypto can be an interesting hobby.
If you are an investor of crypto, it is good to know who the large holders are and to keep tabs on their actions, especially if you are an active crypto trader. This insight can help you with your trading plan, and possibly keep you out in front of massive price swings.
If you are a long-term crypto investor, whale watching may not matter much. If you have done your research and are confident in the long-term viability of a given crypto, whale movements may not factor in your long-term investing strategy.
Overall, crypto whales are the market makers for crypto assets, but may not matter much in the long run.