The trend of investing in the crypto market is increasing day by day. As the name indicates, crypto whales are the investors or organizations that own the most prominent position in the market. These whales have the potential to change the value of the cryptocurrencies in the market through their enormous wallets.
Traders need to understand the concept of crypto whales and the influence they have in the market to make trading decisions carefully. There are certain tools available in the market too that could help them better understand the logic behind crypto whale trading so that they can make decisions without any confusion or fear of loss.
Here is a comprehensive guide article that could help the readers in understanding the concept of crypto whales and their importance in the crypto space.
What are Crypto Whales?
Usually, a number of large holders are connected with certain cryptocurrencies that can influence the price of that cryptocurrency in the market. Active crypto traders analyze the market conditions with reference to the behavior of these crypto whales.
In the crypto space, the holders having a large number of cryptocurrencies are referred to as crypto whales. Normally these are organizations or individuals owning about 10% or more share in the market.
This can be understood by the example that about 130,000 Bitcoins are owned by MicroStrategy and using their participation in the market, they can easily affect the price of the bitcoins.
Therefore, one can get an insight into the price movements of any crypto assets by following the behavior of the crypto whales. One cannot refer to this phenomenon regarding crypto only.
It can also be applied to the traditional markets when some prominent participants claim to have taken the position of any market product and they can easily manipulate the product price. This can be understood by the example of a popular brand known as Warren Buffett.
The market follows the trend that is set by these big players whenever they decide to sell a particular asset. All the transactions in the crypto market related to cryptocurrencies and nonfungible tokens (NFTs) are carried out on-chain. This had been made possible because of the blockchain network and the transparency it offers to the users.
In case one can identify the crypto positions these crypto whales hold in the market and their size; he can spot the transactions that have been carried out by wallets. Furthermore, the width of the market can then be analyzed by tracking those wallets.
What is Meant by Crypto Whale Tracking?
The actions of crypto whales in the market can be tracked using a number of solutions present in the market. Analytical information about the complete whale actions can be provided by these solutions. Moreover, it also helps the users to make decisions regarding trading and investment.
The amount of cryptocurrency that is moving inside and outside of the exchanges can easily be tracked by crypto investors and traders.
The fall in the price of a crypto asset which may be Ether or Bitcoin is usually expected as a result of sell action whenever the asset is moved into the exchange in bulk quantities. On the other, the price of the asset may rise if the crypto assets are made to move out of the exchange.
This happens due the reason that the supply of cryptocurrencies is decreased when there is a high net outflow of cryptocurrencies towards the exchange.
This results in a decrease in the price of the cryptocurrency. The cryptocurrency may be then bought by a crypto whale using an exchange and it may move the cryptocurrency in bulk volumes into their wallets. This may end up in the bull market in the crypto space resulting in a price hike of all the assets.
There may be certain cases where the selling and buying process may not be disturbed by the crypto whales. An over the counter (OTC) transaction may be carried out between any of the two wallets.
This can be understood by the example that a wallet may receive the USD Coin (USDC) in return for sending a Bitcoin to another wallet. In this case, the transaction is not noticed by the market, and still, it results in the sale of Bitcoin.
The transaction can be studied by the investors and the wallet of their choice can also be picked up whenever a larger transaction is recorded by the blockchain. The term crypto whale wallets can be used in case very large crypto positions are held by the wallet.
Moreover, in order to assess the price movements that are held in the wallet, the wallets and the transactions that are carried out through them should be checked regularly to get a proper insight.
The market of nonfungible tokens may also utilize the phenomenon of whale tracking successfully. Most of the large holders of the collection are usually on by a number of NFT markets.
The community normally gets to know about these holders of nonfungible tokens in many cases. Investors can make decisions regarding selling or buying assets quickly by tracking the behavior of the wallets of crypto whales in the market.
A staunch stance may be built in the market if the floor of the NFT market is swept by any crypto whale or any well-known NFT collector.
As a result, the followers will also start buying the nonfungible tokens by looking at the whale or the famous collector. This situation was faced in the bull market of nonfungible tokens in the year 2021 a number of times.
However, even if one is dealing with a single cryptocurrency or collection of nonfungible tokens, it becomes quite a tangible and time taking process for one to always lead the whale action in the market. This is the reason that whale tracking tools were created to help traders better in market conditions.
What is the Use of Crypto Whale Tracking Tools?
Because of the transparent and secure nature of blockchain technology, investors have gained the ability to identify the wallets in the market. The automation of the tracking procedures can be carried out by using the tracking tools.
The trading portfolio of the majority of crypto investors is composed of more than one cryptocurrency. The traders need to track and identify the major wallets that hold huge volumes of cryptocurrencies they want to invest in.
It will help them to stay informed and updated about the market conditions and movements. All these functions are provided to them by the tracking tools that are present on the chain.
The scan is performed by the tracking tools using the blockchain. Whenever any whale wallet carries out a transaction, it gets spotted at the moment and the user is informed about it.
Moreover, one can also use these tools to identify any transaction that has a size greater than the normal one. This helps the users to find out the crypto whales that are present in the crypto space easily.
In addition to that, these tools can be used to track the collection of nonfungible tokens for a number of purposes. These actions may include selling the nonfungible tokens below the floor price, listing the tokens below the floor price, floor sweeping, and a number more.
The minimum price at which one can buy the nonfungible token in the market is referred to as the floor price. The floor price for the token gets lowered when the demand for the token in the market decreases gradually.
In case any one of the holders lists the nonfungible token below the floor price, this is the point where the floor prices of the token begin to fall.
The demand for the collection of nonfungible tokens starts increasing during the floor sweep. This is a situation when a number of nonfungible tokens that are listed at the floor price for the collection are bought by someone.
Whenever the floor of any new collection is swept by the wallets of the crypto whales, it immediately gets spotted by the tracking tools. This helps in providing alert signals to the investors in the market and they then start searching out for new collections of the tokens in the market.
How Could Crypto Whale Activity Be Tracked?
There are multiple ways through which traders can track the crypto whale activity going on in the market. Some of the commonly used methods are mentioned below.
- On-chain Analysis
The term on-chain analysis is referred to the condition when the transactions occurring over the blockchain are analyzed in order to track the crypto whales in the market. The value of transactions and the sizes of blocks are usually considered during this analysis.
If the amount of data is huge, it indicates a large block size. Similarly, if a huge amount is exchanged it will show a large transaction value.
The activity of the crypto whales can be analyzed by using the address that is being used for carrying out the transaction. Moreover, the activity of crypto whales can also be analyzed by these three transaction types.
- Wallet-to-Exchange Transactions
This is the type of transaction where the crypto is moved into the wallet by the whales. The currency is then used for trading that can impact the market conditions in any direction, upward or downward.
- Exchange-to-Wallet Transactions
In this type of transaction, the amount of crypto circulating in the market is reduced by pulling it out of the wallets. This normally results in the scarcity of the currency in the market and ultimately an increase in its price.
- Wallet-to-Wallet Transactions
The process by which the currency is moved from one wallet to other by the whales can be tracked by wallet-to-wallet transactions. The value of the currency in the market is normally not affected by such kinds of transactions.
- Crypto Whale Tracker Tools
This is the most convenient and fast method that can be used by traders to track whale activity in the market. The transparent nature of the blockchain network has made it way easier for all to examine market conditions and activities by using these simple tracking tools.
What is Commonly Used Crypto Whale Tracking Tools?
The traders and investors in the market can easily spot the whale actions taking place in the market and make fast and smart decisions on time using the tracking tools available in the market. Some of the commonly used crypto whale tracking tools are Whale Bot Alerts, Whale Watchers, etc.
There can be different qualities that could be associated with whale tracking tools. Some of them are able to analyze and create charts along many other blockchain networks while some of them have the capacity to just simply act as a gateway to staying at the top of a certain blockchain.
Some tracking tools arere simpler to use and just provide the analysis and notify about the whale activities to the users. On the other hand, other provides detailed charting and analytic activities that also provide learning opportunities to the users.
Some of them may have a simple feed while some may use the handles of various social media platforms such as telegram or Twitter in order to keep their users updated.
Coincarp, Clank App, Whale alerts, Whale map, Whale Bot Alerts, and Whale Watchers are some of the key tools that are used for watching the crypto whales. In addition to that, certain functionalities for tracking the whales are offered by some other tools such as Solscan and Etherscan, etc. to their respective blockchain networks by sitting on the top.
No matter how intelligent and sharp one is regarding crypto whale tracking, keeping in mind the uncertain conditions of the crypto market one cannot predict anything beforehand. Similarly, one cannot say anything about how the market will react when a crypto transaction will be carried out.
As the price of cryptocurrencies can be affected by the actions of crypto whales in the market, it is important for traders and investors to keep an eye on the behavior of whales in the crypto space. In case, the macro-economic factors drive a certain market, keeping yourself informed about whales becomes more important.
Advantages of Using a Crypto Whale Tracker
One can get an edge over the other traders in the market by following the movements of crypto whales existing in the market. It helps them make timely decisions and better analyze market fluctuations. Some of the benefits of using crypto whale tracking tools are given below.
- Saves Time
One does not need to find out whales and analyze transactions in spotting the crypto whales in the market. This function is performed by the tracking tool on behalf of the traders.
- Faster Action
If the data is analyzed by the trader on his own, he might not be able to witness certain changes that are now visible to him by using the tracking tool. This helps the traders in uncertain situations such as a decrease in the value of the cryptocurrency that directs them to purchase the dip. Similarly, the currency can also be dumped before the collapse of the market.
- Advantageous Opportunities
Tracking the crypto whales in the market in real-time helps the traders to take benefit of every opportunity in the market by helping them make fast and timely decisions.
- Comprehensive Analysis
Traders can get the opportunity to learn and educate themselves in a better way by using the charts and other analysis tools present in the market.
Disadvantages of Using a Crypto Whale Tracker
In addition to providing several benefits to the traders and investors in the market, there are certain drawbacks come with the use of crypto whale trackers. Some of them are mentioned below.
- Ignoring Other Market Opportunities
There is a possibility that the traders may not pay attention to other opportunities that are present in the market while keeping their main focus on the crypto whales. It should be kept in mind that although the whales have a prominent role in the market, however, they are not the only factor that could change the market conditions.
- May Lead to Financial Loss
Blindly following the crypto whales in the market and keeping an eye on them constantly may lead one to frustration and cause one to make decisions that might end in a major loss.
- Expensive
Tracking the crypto whales in the market may also prove quite expensive for new traders as it may cost hundreds to thousands of dollars annually.
Conclusion
In case, the trader decides to invest in the crypto market, he needs to look out for the whale actions in the market to have an analysis of the price movements of different cryptocurrencies. The traders can learn a lot about the market conditions while using the crypto whale tracking tools and educate themselves.
Moreover, it also helps them to take benefit of every kind of opportunity in the market and make smart decisions during the ups and downs in the market.
