4 July 2020

We know that the crypto market is one of the most ruthless markets out there. You might be up by hundreds and hundreds in a single trade, and next thing you know, you lost it all. This volatility is one of the main reasons so many people fail to earn something in this market. Yet, there is a select group that at the very top. This elite group of people runs the market. They are the so-called whales of the crypto market. What is a whale? Where did they come from? In this article, we will explain what they are and how to follow them to your advantage.

What is a Whale?

Let’s answer the first question that comes to mind. What is a whale?

Imagine the crypto market as a sea. This vast sea is full of fish. Each of these fish represents a trader. Some are bigger than others. Others are easy prey for bigger fish. Yet, there’s one that takes up a lot of space in the sea – the whale.

These whales are traders who have amassed large amounts of money in the market. They usually take advantage of the anonymity of the crypto market as not to reveal who they are. They are the kings of OTC markets and hidden orders. Yet, the blockchain reveals all the money they have as well as every time they move it.

Who are These Whales?

Now that you know what whales are, you might wonder how they get so much money. The truth is, there are few ways these whales were born.

The first whales of the crypto market are those early adopters. So many years of Bitcoin increasing their prices exponentially, their ROI is immense.

Some other whales are part of an institutional market. These institutional investors bring great liquidity to the market. They take the profit out of the volatility of the market. Likewise, they trade with big volumes, so they can bring the price up or down, depending on their bias.

Whales essentially control the market with their investments.

How to Follow the Whales

Let’s go back to the example of the sea. What happens if a small fish gets in the way of a whale? They will likely get swept away. This is exactly what happens in the crypto market. If you open a position to counter trade a whale, you will most likely lose.

If you are one of these little fish, the best you can do is latch on and swim in the same direction as a whale. Also, whales often base their analysis on a variety of different market factors. So, if your analysis is right, congratulations – you are swimming in with the current.

However, you must be careful with these whales. Their plan is usually to give a buy signal to the general market. Once enough fish have joined the stream, they abruptly leave the market, thus taking a large part of the profits with them. All this happens while the smaller and the last fish to join the wave take the losses.

Conclusion

Be careful – many so-called whales in social media want to deceive you. Don’t blindly follow a signal just because there’s a lot of volume behind it. Also, not every big movement between wallets is a result of a whale – sometimes, it is an exchange switching from cold wallet to hot wallet or vice versa. 

If you want to be a whale, you have a hard road ahead of you to build the wealth you need. The other way is to bet on a low volume cryptocurrency and expect that in the coming years, it will grow. Yet, this can go either way. Be diligent with your money.

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Edmund McCormack
Tech industry veteran and blockchain technology investor. Simplifying cryptocurrency for almost a decade.

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