Do you know which members of the crypto community are called whales and what this term means? Keep reading to find out!
What Is A Whale?
The term “crypto whale” refers to individuals or entities that own cryptocurrency in large amounts and have the power to influence currency valuations. They are called this way because, much like their namesakes from the animal kingdom, they are enormous in comparison to the smaller fish.
What You Need To Know About Whales
As you have probably understood from the whale definition, it is a subjective status in the cryptocurrency space that is relative to the size of a given cryptocurrency.
While there is generally no defined threshold for the sum that one needs to have in possession to be considered a whale, some crypto enthusiasts agree that the minimum bar for Bitcoin holders has to be no less than 1,000 BTC.
In practice, a whale is easy to spot by looking at the concentration of wealth. For instance, in May 2022, 3.49% of all the Bitcoins in circulation were owned by 4 wallets, while in the case of Dogecoin, 15 addresses held nearly 52% of the cryptocurrency.
If any of the top 100 wallets conduct transactions, they are announced via the Whale Alert website and Twitter. The reason why such high-profile accounts are closely monitored by the crypto community is their potential to influence the market.
For example, if such large amounts of cryptocurrency sit unmoved in accounts instead of being used, this means that there are fewer coins available to trade, which decreases the liquidity of the cryptocurrency in question.
Whales can also increase price volatility, especially when they decide to transfer large sums of crypto in one transaction. For instance, if a whale were to sell a big part of their BTC for fiat currency, the lack of liquidity and the fact that other market participants see the transaction, would create downward pressure on Bitcoin’s price.
However, note that most big players opt for Over the Counter (OTC) trading rather than conventional crypto exchanges.
