What are crypto whales?
Who are Crypto Whales?
A crypto whale is a term used within the cryptocurrency community to refer to individuals or entities that hold large amounts of cryptocurrency. The exact threshold for what constitutes a whale is not precise, but it's generally agreed that ownership of a large amount of a cryptocurrency's circulating supply qualifies one as a whale. For instance, an entity that holds at least 1,000 BTC is often considered a Bitcoin whale.
How do Crypto Whales Influence the Market?
Crypto whales may influence the market due to their large holdings. When a whale transacts a large quantity of a cryptocurrency, it may cause noticeable price movements. For example, if a whale decides to distribute a large portion of their holdings, it may increase the supply of that cryptocurrency in the market, potentially leading to a decrease in its price. Conversely, if a whale acquires a large amount of a cryptocurrency, it may decrease the supply in the market, potentially leading to an increase in its price.
The Effect of Crypto Whales on Liquidity
Crypto whales may influence the liquidity of a cryptocurrency. Liquidity refers to the ease with which an asset can be bought or sold without causing a significant change in its price. If a large amount of a cryptocurrency is held by a small number of whales and is not being actively traded, it may reduce the liquidity of that cryptocurrency. This can make it more difficult for other traders to buy or sell the cryptocurrency without causing significant price movements.
Monitoring Crypto Whale Activity
Due to their potential to influence the market, the activities of crypto whales are closely observed by the crypto community. There are even platforms dedicated to observing and reporting on the activities of crypto whales. This information can be useful for other traders, as it can provide insights into potential future price movements.
Crypto Whales and Blockchain Governance
Crypto whales may influence the governance of certain blockchains, particularly those that use a Proof of Stake (PoS) consensus mechanism. In PoS blockchains, the amount of cryptocurrency a person holds can grant them voting power in decisions about the blockchain's rules and future development. As such, crypto whales may have a say in the direction of these blockchains.
