Cryptocurrencies are highly volatile and randomly change their position. Cryptocurrency volatility depends on several matters. It can be highly influenced by large investors’ regular massive transactions in the market. These massive investors or making transactions accounts are known as whales and their bulky transaction amounts or activity are known as whale movements. Strategic traders always follow the whale movements. It raises expectations to benefit from the price volatility. The whale movement is a crucial thing for the price of the crypto market.
How do whale movements impact the market?
When the market whales start to buy large amounts of crypto, the particular crypto’s price would increase. On the other hand, if a group of large investors starts to sell any token or crypto, the price would drop later.
In this movement, the anticipation is easy. When the whale group starts to purchase massively, it causes scarcity. That led to a high rate. Contrarily, when the investors free their assets into the market or start to sell, that time supply increases. This causes the price to drop.
Though, many traders and investors start to follow and copy the whale’s movements. When the group starts to sell or buy, the whole market follows the same.
The Indicator Of Whale’s Selling Pressure :
One of the indicators of whale selling movement is when it is noticed that a wallet transfers a huge amount of crypto into any exchange wallet. That indicates that the whales are going towards selling the crypto which will cause a price fall in the market. That is the time for the users to get back their amount before the price falls.
Sign Of Whales’ Buying Pressure :
Investors mainly choose cold wallets for storing cryptos for the long term. To make the wallets less secure from hack and attacks, the wallets are not connected to the internet. When it is seen that any massive withdrawals take place out of an exchange wallet and into a whale wallet, it is a great sign that the whales are preparing to hold their assets.
This holding pressure from crypto exchanges results in a scarcity of supply. That causes a high price rate.
In 2019, the price of Bitcoin rose to around $11,500 from $4,200 in June. This price breakout was caused by the purchase of 20,000 BTC executed across three different exchanges.
Over-The-Counter Trading :
When whales do not go for any movement in the market, they follow to opt for over-the-counter or OTC trades. It refers to the transfer of crypto from one wallet to another wallet for a fixed price that is predetermined. The wallets are secretly owned by an exchange or another buyer. These OTC trades only affect the markets during any breaking news.
The Tracking Tools Of Whales :
Some of the whale tracking basics are known to several users. Let’s have a look at some of the tools that a user can follow to track whale movement. The tracking is possible because of the transparent nature of cryptocurrencies. There could be anonymity but not full secrets.
Blockchain Explorers :
The cryptocurrency’s transparency is unlocked through blockchain explorers. They function as crypto search engines. Here, a user can search for a wallet and explore its holdings and all the transactions.
Several blockchain explorers offer the user to sort transactions by amount. This helps them to get precise data on the whales and get in-depth information on what they are preparing for. To get the information, the explorers help the users.
Though these explorers’ actual use was to check and track the success or failure of the users’ transactions. Now, they have also shifted into whale tracking platforms.