What Is a Crypto Whale?

A crypto whale is an entity that holds large amounts of cryptocurrency. These whales own enough cryptocurrency to influenc🍷e liquidity and prices, and their actions are closely watched.

Understanding Crypto Whales

Large cryptocurrency holders are called whales because their accounts are much larger than the smaller fish (accounts) in the cryptocurrency ocean. Four bitcoin wallets owned 3.56% of all the bitcoin in circulation in August 2024 according to BitInfoCharts. The top 113 wallets held more than 15.4% of all bitcoin. There are thousands of accounts that hold less than 10,000 BTC that can be considered whales.

These large accounts are closely monitored by the crypto community and investors. It's publicly announced on the Whale Alert website and its X (formerly Twitter) account if any whales make transactions.

A Whale's Effect on Liquidity

Whales can be a problem for cryptocurrency because they're high-profile wallets that concentrate wealth, particularly if it sits unmoved in an account. This lowers a specific cryptocurrency's liquidity when coins sit in an account rather than being used becauseღ there are fewer coins available.

Many of the Bitcoin top whale addresses have been identified by the community—there are exchange cold wallets or reserve accounts, accounts that hold bitcoins recovered from thefts in the top accounts, a😼nd some unidentified. The top 113 accounts ( more than 10,000 Bitcoin) held more than 15% (about 3 million BTC) of the circulating bitcoin, with some going months to years without transferring an🌄y out. However, these accounts (of which many are exchanges) are less likely to affect liquidity at a large scale than those that hold between 100 and 10,000 bitcoins. These accounts hold 44.49% of all circulating bitcoin, or about 8.8 million.

These are the accounts that affect liquidity the most because they do not transact very often. For example, account 198a-g3Hi holds 8,000 BTC (about $476 million at Aug. 30, 2024 prices). It first began acquiring bitcoin on Feb. 22, 2009, and has had no outgoing transactions since.

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 澳洲幸运5官方开奖结果体彩网:exchanges. 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.

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.

Crypto Whales Can Affect Governance

Someও blockchains give governance voting rights to cryptocurrency holders. If a whale holds enough cryp꧃tocurrency, they could influence the direction blockchain development takes because in most cases, votes are weighted by how much a voter holds.

It is possible for crypto whales to influence changes in a blockchain that create more benefits for themselves or cause the blockchain to become less decentralized. This can affect that specific cryptocurrency's market because it can make it more or less attractive to investors and users, thus influencing its price.

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.

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 澳洲幸运5官方开奖结果体彩网:businesses 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 their transactions and values. They're publicly announced on the Whale Alert website and X (formerly Twitter) account.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our 澳洲幸运5官方开奖结果体彩网:warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.