Whale

Whales are a term used to describe individuals or entities who possess significant amounts of a certain asset that can manipulate markets.

Certain types of assets are more capable of being influenced by whales than others, namely stocks and cryptocurrencies.

In the case of crypts, whales can strategically buy and sell portions of their holdings. This can result in broader market moves, triggering drops or bumps in the price of that crypto.

There is no shortage of examples across markets of whales affecting prices. One of the best-known instances is on the Bitcoin network.

During the inception of the Bitcoin network, small numbers of whales who mined large amounts of Bitcoin were able to significantly impact its price.

Presently, many whales on the Bitcoin network are hedge funds that have BTC as part of their holdings.

These kinds of whales are less prone to making buys and sells with the intention of moving the market, though do hold a large amount of market clout.

Whales often are not even individual investors but specific funds or entities. The largest Bitcoin whales include such funds as Pantera Capital, Bitcoins Reserve, Binary Financial, Coin Capital Partners, Falcon Global Capital, Fortress, Bitcoin Investment Trust, and Global Advisors Bitcoin Investment Fund.

How Does a Whale Affect Asset Price?

Whales can be thought of as highly influential investors. For example, when a whale enters a position, the price tends to follow a similar pattern.

Using a specific stock as a reference, demand for the stock will rise rapidly as positions are being bought amid large volumes.

Consequently, the price will skyrocket, and other investors will notice, thereby jumping on board, perhaps mistaking a bull trend, or not wanting to miss out.

However, often after a few minutes or hours, the number of new investors will slow down creating causing a plateauing of the price.

Eventually, investors ultimately lose confidence and begin to pull their position out of fear that a crash in the price is coming, causing a crash themselves.