Whales on cryptocurrency market
Whale on cryptocurrency market is a person who has a large amount of cryptocurrency. The volume of applications made by a whale affects the exchange rate of a particular coin.
Who is the whale?
How whales make a profit?
Whales profit when they manipulate the market. For this, the following schemes are most often used:
Draining and Growth Cycles
- large cryptocurrency holders
- mining pools
- institutional traders
- large investors
- hedge funds and cryptocurrency investment funds
The whale begins to sell relatively large volumes of cryptocurrency at below market prices. This leads to panic and «drain» of the coin, and the whale buys off the cheaper cryptocurrency, which returns to its previous price levels.
Walls of purchases and sales
Walls of purchases are formed when the volume of applications for purchase is significantly larger than the volume of applications for sale. The formation of walls by whales does not mean that they want to buy and sell a coin. Most often this is done to influence the market crowd.
Whales keep the price of cryptocurrency in a certain price range until they realize their interest. It can be a set of a trading position or an outlet for taking profit.
The appearance of increasing demand is created with a small number of requests for sale to do this, large purchase orders are placed in a glass, which are visible to all market participants. The market crowd, waiting for the growth of the asset, enters the market in front of large orders. As soon as a whale gains the necessary volume of a short trade position, a large purchase request is canceled and the market falls.
Pumping and draining (Pump&dump)
The technique involves the use of media and communities on social networks to provoke small players to buy coins. This allows whales to sell cryptocurrency, bought for a pittance, at a good price. After the release of the whale, the value of the coin drops to the levels preceding the pumping.