Seeing a whale alert like "40,000 #BTC (762,392,000.00 USD) transferred from an unknown wallet to #Binance'' will surely get you spooked unless you are a crypto whale yourself. This might be due to some random whales moving their holdings from one wallet to another, or, as a result of their capitulation in response to the ongoing rumor in the market. Either way, the actions of whales in cryptocurrency require close monitoring by smaller investors so that they could make proper investment decisions, and save their portfolios from tanking as a result of the market reacting to these actions.

The concept of whales in cryptocurrency is very wide and technical as most investors could not find a fully comprehensive approach to it. However the fact that some analysts see it as a threat to equality and decentralization, but it has proven to be a very profitable sentimental tool when used in the right way.

Long story short, let's get started by fully defining the concept of whales in crypto and why they are very important.

What is a cryptocurrency whale?

A "crypto whale" is a crypto term that refers to individuals, financial institutions, companies, and institutes that hold large amounts of a particular cryptocurrency. These owned amounts are significant enough to impact the market currency valuation of the cryptocurrency token when moved about.

An example of this is that of July 2, 2021, when 18 new whales with a collective amount of 82,760 BTC were spotted in the bitcoin market. The Shiba Inu, October to November 2021 price explosion was also believed to be mostly triggered by whales' actions over that period. In addition to that, the April 2019, $1000 increase in bitcoin price over just two hours was analyzed to be a result of a single 20,000 BTC order that was executed across 3 different exchanges.

With sudden whale actions posing serious concern to smaller investors, it is imperative to keep track of their moves and adjust one's position in the concerned crypto market if necessary.

Although there is no specific amount of crypto holding to becoming a whale, the consensus has it that a bitcoin whale is the one that holds more than 1000 BTC.

Who is a crypto whale?

The anonymity and perhaps, the ambiguity of the world of cryptocurrency makes it rather impossible to identify who exactly is a crypto whale. However, other than the fact that each pseudonym creator of a cryptocurrency is considered a "hunchback" whale of its creation, visible transactional information also makes it easy for smaller investors to keep track of the top 100 wallets and categorize them into either hunchback whales, whales and sharks as the case may be.

Despite that, there are a few public figures that have been known to have a very huge investment in certain cryptocurrencies, and they are considered a whale of the said crypto. Examples of such are; Brian Armstrong, the Winklevoss twins, Satoshi, Chris Larsen, Jed McCaleb, and Michael Saylor. If you are looking into institutional investors, then you can put MassMutual, Microstrategy, and Ruffer investment, at the top of your watchlist.

What are whale actions - Retail investors concern

As there have been many deductions from different kinds of whale actions based on sentiment, it is essential to know that these actions do not always lead to a specific outcome. Expert crypto traders, in turn, believe that every whale move is a smart move and has its own hidden agenda. It is in fact, safe to assume that these whales know themselves and that makes it easy for them to jointly pull their game of getting the rest of the market to act in their interest. They know you are watching them and they play their moves explicitly with that in mind.

Despite that, the emergence of a whale alert does not always require the need to panic as many retail investors do. A wallet-to-wallet whale alert might just simply be a wallet-to-wallet transaction and nothing special. Moreover, lots of big transactions like this have also proven to be the starter of rumors, some of which fuelled out easily and some others that lasted for a long while.

Based on how hard it is to measure sentiment, the long-lasting rumor does not die down unless a major event big enough to subdue it occurs. The 2021 to 2022 rumor of an impending crypto fall was only brought to a significant pause after the major LUNA crash. What this suggests is that rumors triggered by lots of whale alerts over a short period can come out to be true and become a major event in the news.

Similarly, a "wallet-to-exchange" whale alert suggests that the owner of the coin is intending to sell it off in a short time. This might prompt other investors to sell off their holdings and bring down the price valuation of the coin, which in turn, gives the whale the opportunity to buy back in at a lower price.

An "exchange-to-wallet" whale alert suggests otherwise. This means that the owner of the coin is not intending to sell it soon and it is an indication that the coin is worth holding. Such transactions decrease the liquidity of the coin thereby increasing its worth because no larger player is willing to sell them out. In this case, it is a win-win situation for all, as this is what all retail investors also want.

In addition to that, a whale alert of stablecoin, transferred from a wallet to an exchange, suggests that the owner is intending to buy BTC or any altcoin with it. The reverse, which is the transaction of stablecoin from an exchange to a wallet, suggests that it is not a good time to buy and sometimes, an indication of a bear market.

What raises the most concern, is the "exchange-to-exchange" whale alert that seems not to have any clear reason behind it. However, analysts have seen it to be influenced by launchpads that got the whales to move into a new project on another exchange. Some also argued that the whales are just trying to take advantage of the price difference in a coin over the two exchanges.

However the case may be, having in mind that the emergence of any crypto whale alert has the potential of moving the market will get you prepared against such ones that may do damage to your crypto portfolio. The above suggestions of "reasons behind a whale transaction" have proven to be effective over time, and they work better if generally agreed on by fellow investors.

That being said, how do we get our hands on timely and credible whale transactional information?

How to get a whale alert

As suggested earlier, getting to follow the known whales and keeping track of their actions would give first-hand information about what they are up to. Besides, subscribing to the site, Whale Alert and following them on Twitter (@whale_alert) is another most used option for getting large and interesting crypto transaction information. They make tweets that provide real-time transaction data for traders, developers, and blockchain enthusiasts.

Conclusion

While all whale alerts have the potential of moving the market, some are only significant enough to cause short-term waves that are mostly affected by day traders. In that sense, adequate trading skills and experience are further required to make the right trading decision. It is also important to note, and always note that this guide is not financial advice.