What Is a Crypto Whale?
Why Trust Cryptonews
Whales create their own currents in the ocean, making wakes and waves, their presence well known. The same is true of crypto whales, people who own enough crypto to move markets. Not all whales are the same size, however, and the size of the trading market can influence the definition of crypto whales.
Whether it’s meme coins trading on a Layer 2 chain or a massive worldwide market like Bitcoin, crypto whales make a big splash when they arrive. So, what is a whale in crypto, how are they defined, and what effect do they have on trading? Let’s find out.
Summary: What Is a Crypto Whale?
The term crypto whale refers to a person – or, more accurately, a crypto wallet address – that holds a significant amount of cryptocurrency. However, we often define crypto whales within a market context, meaning they have enough of a specific cryptocurrency to impact market prices for that coin or token.
Whales can trade in larger amounts, causing traders to buy and ride the wave or sell as whales drop the floor with large sell orders. However, even without trading, whales can impact a market. Many traders watch whale wallets to see where they move their funds. For example, a crypto whale wallet that sends crypto to an exchange may be preparing to sell some or all of the transferred amount. Whales might also use movements like this or orders on an exchange to influence the price.
How Much Crypto Do You Need to Be a Whale?
By one definition, a Bitcoin whale is someone who owns 100 bitcoins (worth about $6.3 million as of this writing). The term crypto whale often differs by market, however. For instance, a whale might own dozens of assets, which collectively make them a whale in the perception of smaller traders.
Glassnode, a leading crypto data aggregator, breaks ownership tiers into categories, a pattern mimicked on decentralized exchange platforms like Dexscreener to differentiate wallet addresses by trading volume.
The definition of crypto whales varies depending on the context of the trading market. In meme coin trading, a whale might be someone who owns 1% or more of the token supply. Buys and sales of this size can move the market up or down, which also fits the definition of a crypto whale – even if the market size is much smaller than the Bitcoin market.
How Do Crypto Whales Impact The Market?
Crypto whales influence the market in several ways, adding or removing liquidity, shifting market sentiment, and shaking markets with waves of volatility. A Bloomberg report suggested that 2% of Bitcoin wallet addresses controlled 95% of Bitcoin’s supply. The dynamics of crypto’s concentrated ownership will change as Bitcoin and Ethereum ETFs gain a stronger foothold. However, crypto whales will remain part of the crypto landscape for the foreseeable future. Let’s look at how these crypto-rich giants affect trading.
1. Effect on Market Liquidity
Ample liquidity is essential to healthy markets and price discovery. Liquidity refers to the ability to trade in and out of an asset as needed. There must be enough trading supply to do this, and that’s where crypto whales become relevant. If a relatively small group controls a large amount of supply, trading can become erratic, and price moves might be more dramatic. Crypto whales often hamper liquidity by making a large amount of the supply unavailable for trading.
However, whales’ effect on markets can also create too much liquidity without allowing the market to adjust. A cryptocurrency trading within a given price range can be pushed outside that range by whales buying or selling large amounts of the asset.
2. Influence on Market Sentiment
Whales’ trading activity often affects market sentiment, pushing prices higher or lower. Many regard crypto whales as “smart money” and follow their trading moves. The effect of crypto whales might be most obvious in small-cap tokens. A large buy can send a chart soaring, particularly if several large buys occur to offset profit-taking pressure. Similarly, a large wallet selling can trigger a massive sell-off as others scramble to preserve their trading capital.
3. Contribution to Price Volatility
The effects of large trades on market sentiment and the rapid changes in liquidity caused by whales contribute to volatility in crypto markets. Bitcoin’s market cap recently crossed the $1 trillion mark. However, this valuation is still relatively small compared to some stocks, such as Apple, Nvidia, Microsoft, Amazon, and Google, four of which have a market cap of at least twice as large as BTC’s market. Unlike stocks, however, Bitcoin ownership is more concentrated. Whales can and do move Bitcoin’s price as they make trades or move assets to signal future activity.
Whales’ trades and wallet activity can have a much more profound effect on markets due to the higher leverage levels common to crypto markets. A few large trades can trigger a cascade of buying or selling, forcing liquidations for leveraged positions and increasing the trading momentum. An August 2024 Bitcoin crash caused over $600 million in liquidations for leveraged long trades, which fueled more selling.
Do Whales Manipulate the Crypto Market?
Whales manipulate crypto markets in various ways, from wallet movements to buying or selling pressure. A crypto whale moving a considerable amount of supply to an exchange might signal an intent to sell. However, it isn’t always necessary to sell to affect the market price. The threat of selling may be enough to stall markets.
In other cases, a smaller — but still sizable – trade might be used to manipulate the market for a larger trade. A few well-timed trades on a flat or declining chart can cause prices to fall, although the sales may have been a setup for later buying at a lower cost.
On centralized crypto exchanges, crypto whales might use the limit orders to manipulate markets.
- Sell Walls: A sell wall uses one or more large limit sell orders to create a price ceiling. Often, the result is falling prices. Other sellers need to choose a level below this wall to see their order filled. In this example, whales can manipulate the price without selling anything at all. The sell wall might act as a facade for more accumulation at lower prices.
- Buy Walls: Similarly, a buy wall uses one or more large orders at a price below the current trading range. This creates a floor, often causing prices to rise.
Who Are the Biggest Crypto Whales?
Bitcoin whales tend to garner the most attention, including Bitcoin’s creator, the anonymous person or group known as Satoshi Nakamoto. According to some estimates, Satoshi’s wallet holds about 1.1 million bitcoins.
Unknown Bitcoin whales hold another 1.6 million bitcoins. Law enforcement agencies around the world hold another 335,000 bitcoins. Exchanges, banks, and investment funds hold as much as 3.2 million bitcoins, although much of this supply is held on behalf of smaller investors. Let’s examine the estimated holdings of some of the largest crypto holders worldwide, many of which are companies rather than individuals.
- MicroStrategy: 226,500 BTC
- Marathon Digital Holdings: 20,000 BTC
- Coinbase: 9.480 BTC
- Winklevoss Twins: 70,000 BTC
- Tether: 75,000 BTC
- Tim Draper: 30,000 BTC
- Tesla: 9,720 BTC
Ethereum whales get less notoriety and are often unknown. However, Vitalik Buterin, a co-founder of the Ethereum project and often seen as the project’s face, holds about 0.23% of the ETH supply. The value of his combined crypto assets is estimated to exceed $1 billion.
How to Monitor Whale Activity
Methods for tracking whale activity vary by asset and by platform. For example, you can use a site like DeBank to track the holdings of large wallets on Ethereum Virtual Machine (EVM) compatible networks. Other services like Arbitrage Scanner offer powerful whale-tracking tools but may require a subscription plan.
These tools pull much of their data from blockchain explorers like Blockchain.com (BTC) or Etherscan, which displays activity on the Ethereum network.
For example, you can track Vitalik Buterin’s wallet activity on Etherscan.
Other free resources include Twitter (X). For instance, Whale Alert offers frequent updates on whale wallets for several leading blockchains. These alerts include activity for long-dormant wallets, large transfers, and large crypto-exchange deposits from self-custody wallets.
Tracking whales on exchanges removes this transparency, however. Once the funds reach the exchange, there’s often no way to associate transactions with a specific wallet address without information only the exchange has.
How to Deal With Crypto Whales
Crypto whales make big waves in the markets, but some simple strategies can help you minimize their effect on your crypto portfolio. The most significant risks to your portfolio come from sudden reactions to a crypto whale’s actions, and that might be exactly what the whales were hoping to achieve.
- Avoid panic selling and FOMO. Panic selling on a dip or chasing candles for fear of missing out (FOMO) puts your emotions ahead of rational trading. Analyze your reasons for investing and see if they have changed. Whales may leave as suddenly as they arrive. If your investment still makes sense, the short-term effect of crypto whales becomes less impactful.
- Diversify your holdings. Whales making waves in one crypto market might not affect another market at all. Consider diversifying your holdings to reduce volatility from asset-specific news or manipulation.
- Dollar-cost average (DCA) your trades. Dollar-cost averaging refers to investing (or selling) a fixed amount at specific intervals. For instance, you might invest $100 each month into Bitcoin. Using this strategy, you buy more when prices dip and scale down the amount you buy when prices are higher. DCA smooths market volatility, making the comings and goings of whales largely irrelevant. You can also reverse this strategy to exit a position.
Conclusion
The effect of whales is more dramatic in crypto markets than in traditional financial markets because crypto markets are often smaller. However, crypto whales can move markets up or down just by their presence. Outsized buys and sells send the charts up or down at a whim. On exchanges, whales can suppress the price or create a floor that pushes prices higher with large sell walls or buy walls.
As an investor, it’s essential to avoid letting the actions of whales affect your investment decisions, particularly panic buying or panic selling. Instead, look for ways to lessen the impact of whales by using dollar-cost averaging and diversification strategies.
References
- No, Bitcoin Ownership is not Highly Concentrated – But Whales are Accumulating (glassnode.com)
- Bitcoin Whales’ Ownership Concentration Is Rising During Rally (bloomberg.com)
- Bitcoin regains $1 trillion market cap as the cryptocurrency hits over two-year high (cnbc.com)
- Bitcoin crashes below $53K, wiping out $600M in leveraged longs (cointelegraph.com)
- As banks buy up bitcoins, who else are the ‘Bitcoin whales’? (bbc.com)
- vitalik.eth wallet (etherscan.io)
- Whale Alert (x.com)
Connor Sephton 
Elena Bozhkova