Whales, the largest cryptocurrency holders. Named perfectly, the movements of cryptocurrencies from their wallets can be large and have significant impacts on the prices. A simple law of economics, the supply and demand in trading platforms are tilted heavily in their favor.
Their movements are a cyclic effect though. A sudden rise in the prices can mean these whales can reap in the profits by dumping their large currencies. Their actions cause a surge of supply in the market, causing the prices to drop afterwards. The whales can be quick to make secondary profits, should they choose to do so. The aftermath of their flooding the market, a drop in the prices, gives them an additional opportunity to buy back more of their cryptocurrencies, in a larger volume. The buy back can create a vacuum in the supply, leading to surge in values.
A Brief History of Whales Influencing the Crypto Market
Bitcoin, the largest cryptocurrency by market capitalization, is not immune to the whales either. Following are the most significant whale transfers and movements that have had a heavy impact on the price of Bitcoin:
11 March, 2020: Although the recent crash and volatility of BTC is largely attributed to the global economical turmoil that follows in the wake of the pandemic COVID 19, a careful analysis by careful study by Chain News shows that the crash of 1,800 USD in the price of Bitcoin was due to the movement of 1,000 BTC. The movement was from nearly 28 wallets in total, that saw the cryptocurrency being distributed to around 55 exchanges world wide. At first glance, the movement does not seem to be from a single whale, but such coordination of more than a dozen wallets, spread across the wide range of exchanges seems impossible. It is easy to speculate that the wallets were controlled by a single entity and had capitalized on the market value being high.
4 June, 2019: 25,000 BTC were moved in a single whale transaction to crypto exchange Coinbase. At the time, the amount represented around 0.14% of the total Bitcion mined. An hour after the transaction, BTC saw a sharp decline of USD 600 in its price. Later on, Coinbase saw two withdrawals of large quantities of the cryptocurrency, totaling in the exact amount of 25,000 BTC. It is believed that the whale responsible for the dump had bought back its holdings at a cheaper rate. If so, the person(s) behind this action had made themselves a hefty profit of USD 15 million in a few hours.
16-17 April, 2018: In the span of roughly a day, two major whale transfers saw more than 1,300 BTC being liquidated. This led to the price dropping by 200 Dollars on 17th April in a matter of minutes.
These are just three examples of how whales have been (and will) be able to manipulate the price of Bitcoin.