What are crypto whales? Understand crypto whales and their impact on the market

After venturing into the crypto scene, it doesn’t take long to come across a ‘whale’. But what exactly are they, how did they get this title? In simple terms, whales are individuals who own a significant amount of cryptocurrency. Because of their whale-sized holdings, these individuals or organizations can have significant influence on the prices of cryptocurrencies as they buy and sell assets.

When a whale makes a move, it is often a newsworthy event. Therefore, it is useful for every crypto trader to understand not only what a crypto whale is, but how their activities can affect price action.

In this article, we will take a close look at what crypto whales are and the impact they have on the market. We will also explain who/what some of the biggest crypto whales are and how to track their activities.

Who are crypto whales?

Crypto whales are the metaphorical big fish in the crypto pond. In the context of wealth and finance, the term “whale” comes from the gambling scene and refers to the big spenders.

Some crypto whales have amassed their assets simply by being early to acquire large amounts of a token. Others came in later but had the funds to buy up a sizeable bag of currencies. Meanwhile, some whales are organizations that have acquired their assets through mining on an industrial scale.

How much does an individual or entity have to own to be considered a whale? The answer is highly subjective. Some traders agree that the individual or entity should hold at least 10% of the entire circulating stock. However, this is impossible with cryptocurrencies like Bitcoin due to its price and supply structure. As a result, holding more than 1,000 BTC generally gives an individual or entity whale status.

One way to look at whales is those with the power to influence the order book simply by trading on an exchange, such is the size of their typical position. It is no wonder then why whales and their movements attract a lot of attention.

Impact whales have on the crypto market

How exactly to crypto whales and their significant positions affect the market?

Price impact with buying and selling

When a whale sells a cryptocurrency, it’s hard to miss. Often exchanges do not have enough liquidity to facilitate their transactions. Meanwhile, the trade is typically completed via an over-the-counter (OTC) desk. Using an OTC desk brings greater privacy to the buyer or seller and usually allows them to avoid high price slippage. However, if the trade is spotted, other traders often follow with the same position, exacerbating the impact of the whale’s movement. The trading activity of whales can therefore have a waterfall effect and cause a bull or bear run.

Affects market sentiment

Because whales are closely watched, they can easily influence the prevailing market sentiment through their actions. When a whale buys a particular cryptocurrency, it is considered bullish sentiment towards the asset, as other traders are usually also looking to buy the same coins. This usually applies even if the whale does not have a large amount of that particular cryptocurrency. Conversely, the same is true when a whale sells a coin, as it can prompt others to sell as well.

Liquidity in markets

Whales often accumulate a large amount of cryptocurrency because they are confident about its long-term prospects. Therefore, the circulating supply on the market is reduced, which can affect the price of the coin.

Participation in token sales

When a whale participates in an initial coin offering or a token sale, it signals to the rest of the market that they have confidence in its future. The project’s chances of obtaining funding can greatly improve as the trust and commitment of whales makes the project more attractive to potential investors.

Management and influence over the currency’s future

Whales also have a significant influence on the currency’s future. When a whale wants the project to go in a particular direction, the community often rallies behind them. However, this can also be a cause for concern, as powerful whales can influence the community to make decisions that may ultimately not be positive for the wider community.

This was not always the case. For example, when whales wanted Bitcoin to increase its block size and make other changes to the network, they couldn’t get the larger community’s support. This led to the whales breaking away with a small part of the Bitcoin community and forking the network to create Bitcoin Cash. At the time of writing, Bitcoin Cash is worth about 1% of Bitcoin’s total value. Apparently, crypto’s first and largest currency has withstood the pressure of whales, but not all projects can say the same. In the past, anonymous whales have acted selfishly, for example by manipulating a project’s management to enrich themselves.

Top crypto whales

The transparency of blockchain data makes it easy to identify the biggest whales in the crypto space today. Read on for an introduction to six of today’s biggest crypto whales.

1. Satoshi Nakamoto

Satoshi Nakamoto is the anomaly on this list, being a prominent crypto whale whose true identity remains unknown. As the pioneering creator of Bitcoin that paved the way for the industry we see today, it’s hard to ignore Nakamoto and their influence. Nakamoto minted around 22,000 early Bitcoin blocks, earning them a whopping 1.1 million BTC. It accounts for 5% of Bitcoin’s total supply, and the assets remained untouched for more than a decade after Nakamoto’s online activity suddenly stopped. This makes Nakamoto the biggest crypto whale at the time of writing.

2. Winklevoss twins

The second names on this list are twins Tyler and Cameron Winklevoss. They were early adopters of Bitcoin betting big on cryptocurrencies. The twins are known for winning a $65 million settlement after a legal dispute with Mark Zuckerberg over the origin of the idea for Facebook. They used these funds to buy Bitcoin in 2012 for as low as $10 per BTC. Together, the Winklevoss twins own around 70,000 BTC, making them one of the biggest whales.

3. Michael Saylor

Michael Saylor personally owns approximately 17,000 BTC, which is valued at over $1 billion at current prices. However, Saylor’s company, MicroStrategy, also has whale status today. Under his leadership, the American technology company bought 214,246 Bitcoins. Unlike other whales on this list, MicroStrategy started buying BTC after 2020, when the price of Bitcoin was already relatively high. The company regularly exchanges its cash reserves for Bitcoin, which has a significant positive impact on the crypto market.

4. Vitalik Buterin

Vitalik Buterin is one of the co-founders of Ethereum and an influential whale. During Ethereum’s crowdsale in 2014, the founders were awarded 16.54% of the initial supply, which at the time amounted to 72 million ETH. Buterin received approximately 675,000 ETH, of which he sold significant portions in the following years. However, Buterin still has approximately 278,527 ETH, which is worth over $1 billion today. As one of the most prominent figures in the Ethereum community, Buterin’s actions and opinion could create a significant ripple effect for the industry at large.

5. Tim Draper

Tim Draper is a famous venture capitalist who was an early Bitcoin adopter. In 2014, Draper bought 30,000 BTC, seized from the infamous Silk Road, at a US Marshals auction. His exact Bitcoin holdings today remain unknown. However, Draper’s 2014 purchase alone is worth $1.8 billion, and many believe he has continued to buy more Bitcoin since then.

6. Chris Larsen

Chris Larsen is the co-founder of Ripple, along with Jed McCaleb. They both received significant amounts of XRP for their contributions to the company. When McCaleb left XRP in 2013, he received 9 billion XRP, which was 9% of the total supply. However, at the time he made an agreement with Ripple to only sell the tokens at a controlled rate over the following years to avoid influencing the market. In July 2022, Larsen revealed that he had finished selling his stake and no longer had any XRP.

Chris Larsen, on the other hand, still serves as the executive chairman of Ripple and holds around 2.8 billion XRP, making him the largest whale in the XRP ecosystem.

How to track crypto whales

One of the most important aspects of cryptocurrency and its related technology is transparency. This means whale transactions can be tracked in multiple ways in real-time, allowing the community to understand the sentiment and decisions of crypto’s biggest wallet holders.

Accounts like @whale_alert on X have tagged certain whale addresses and are constantly following them. Whenever a whale makes any transaction, the @whale_alert account shares it with followers.

However, you may want to consider using specialized equipment if you are serious about whale watching. For example, crypto-analytics platform Nansen breaks down blockchain data across multiple chains and applications. They also marked whaling addresses for convenience, making it easy to observe their trading activities.

Similarly, you can also set up wallet alerts. Tools like the Etherscan block explorer allow users to tag addresses and set up alerts when activity is detected.

How should we interpret whale activity?

In the traditional financial system, all transactions are opaque. It is impossible for us to know exactly which stocks billionaires buy and sell. With cryptocurrencies, we can see the actions of whales the moment they complete a transaction.

There are two important signals when whale activity is observed: buying and selling. When a whale interacts with a decentralized application to buy a new asset, they are bullish on that asset. Likewise, when they sell the same asset, it is considered bearish.

It can also be interesting to see how whales interact with exchanges. When cryptocurrencies are moved from an exchange to their wallet, this is bullish, as they probably don’t want to sell those coins in the near future. However, traders expect a large selloff if they move assets from their wallets to an exchange. Tracking the movement of stablecoins can also serve as a reliable bullish signal, as they are frequently used to acquire new cryptocurrencies.

The last word

Crypto whales are influential individuals or entities that hold large amounts of cryptocurrency. They know their trades carry a lot of weight, and every move they make is watched. Whales have the power to influence the market in the direction they want, either through their trades or their comments on selected assets.

Like them or not, whales are an essential part of the crypto ecosystem. Their holding represents a high conviction in the crypto space and its future. Whales also help maintain strong liquidity in the market, and are often seasoned traders who are in it for the long haul. In the future, as the market becomes more established, it is possible that there will be fewer new whales due to the high cost of acquiring large volumes of an asset. As part of careful research on a crypto project, it is wise to explore the whales that hold large amounts of the project’s token so that you are fully informed before committing your own time, energy, and funds.