What exactly are crypto whales?
The price of the majority of cryptocurrencies may be influenced by a few of significant holders of the asset. It is beneficial for active traders and investors to comprehend the market actions of these whales.
Large cryptocurrency holdings are referred to as “crypto whales.” They might be people or companies, and they frequently possess more than 10% of cryptocurrency. For instance, because MicroStrategy participates in the market and owns about 130,000 Bitcoin (BTC), they have the power to influence the price of BTC. As a result, keeping tabs on crypto whale activity offers timely information on a cryptocurrency asset’s price trend.
Not only is this a crypto phenomena. In conventional markets, an asset’s price will rise or fall depending on whether a major player like Warren Buffett, a company, or a hedge fund discloses that they have purchased it. Having said that, the market usually reacts to these players selling an asset.
All transactions involving cryptocurrencies and nonfungible tokens (NFTs) take place on the chain. Because of the openness that blockchain provides, whale-owned wallet transactions may be identified by the amount of the cryptocurrency positions they hold. The behavior of the larger market may therefore be predicted by tracking these wallets.
What does whale tracking in crypto mean?
The activities of crypto whales may be tracked using specialized tools. These tools can offer analytics on whale activity and, in certain cases, can help the user make investment or trading decisions.
The volume of cryptocurrencies entering and leaving exchanges is continuously monitored by cryptocurrency traders and investors. Large-scale transfers of cryptocurrencies like Bitcoin or Ether (ETH) into an exchange are typically accompanied by sell activity, which lowers the price. On the other hand, if cryptocurrencies move from exchanges into wallets, it is thought to be a sign that prices are about to increase.
This is so that prices can rise when there is a big net outflow of cryptocurrencies from exchanges, which results in a reduction in supply. A whale might often purchase cryptocurrencies on an exchange and transfer them in bulk to their wallets. This can lead to a favorable price movement for the cryptocurrency.
In certain circumstances, whales may decide against influencing the markets by making purchases or sales on an exchange. They would conduct an OTC transaction between two wallets. By sending Bitcoin to a wallet that would return USD Coin (USDC), for instance, they might sell BTC without the market seeing the transaction.
Investors can examine a major transaction that is recorded on the blockchain to identify the wallets involved. The wallets might be referred to as crypto whale wallets if they hold significant cryptocurrency positions. From that point on, keeping an eye on these wallets and the transactions made inside might be helpful in analyzing price changes of the cryptocurrency stored there.
The NFT markets can also benefit from whale monitoring. Large holders of the collection are present in most NFT communities. These NFT holders are frequently recognized by the local community. Investors may make prompt buy/sell decisions by monitoring the movements of these whales’ wallets.
For instance, strong convictions may be shown if a renowned NFT collector or a whale completely destroys a nonfungible token collection. That would be seen by NFT collectors and the whale, who would then buy the nonfungible tokens. Throughout the NFT bull market in 2021, Gary Vaynerchuk’s actions were repeatedly observed.
Even if it’s just for one cryptocurrency or NFT collection, manually keeping track of whale activity can be overwhelming and time-consuming. Tools for tracking whales can be useful in this situation.
What purposes do crypto whale tracking tools serve?
Due to the transparency that blockchain enables, investors can identify wallets that whales possess and watch them for purchase and sell activity with the use of whale tracking tools. The automation of the tracking process is aided by the use of tracking technologies.
The majority of cryptocurrency owners have multiple cryptocurrencies in their portfolios. They will need to locate and keep tabs on many wallets that store significant amounts of the cryptocurrency they are interested in in order to stay aware about market moves. This functionality is provided by on-chain analytics tools.
When a transaction is committed by a whale wallet, tracking tools immediately identify them on the blockchain and alert the user. These tools may also be used to find transactions larger than a certain value, enabling users to find the whales in the crypto ecosystem.
In a similar manner, NFT collections may be monitored for events like the floor sweep, the selling of NFTs at bid price, and the listing of new nonfungible tokens below floor price, among others. The lowest price at which a nonfungible token (NFT) may be purchased is known as the collection’s floor price. Sometimes the floor price decreases when there is little demand for an NFT collection.
One NFT holder will frequently advertise their NFT below the floor price to start the decline in floor pricing. Therefore, such activities may be identified using whale tracking techniques so that an investor is made aware and can take appropriate action.
On the other hand, a floor sweep suggests that there is a great demand for an NFT collection. This describes the act of purchasing a large number of nonfungible tokens from a collection that are being offered for sale at the floor price. When a whale’s wallet sweeps the floors of a new collection, whale tracking tools can detect it. Investors in NFT will be made aware, and they will then be able to follow the new collection.
What technologies are often used to track crypto whales?
Investors may identify whale activity and make prompt and informed decisions by using whale tracking software like Whale Watchers, Whale Bot Alerts, and others.
The capabilities of whale monitoring tools vary; some are as basic as a window on top of a blockchain, while others offer analytics and graphing skills across numerous blockchains. While some only offer NFT whale tracking, others also cover crypto whale tracking.
While some analytics systems just provide customers basic insights and alerts on whale activity, others offer more in-depth learning possibilities on charts and analytics. Some only provide a straightforward feed, while others use Twitter and Telegram to update subscribers.
Whale Watchers, Whale Bot Alerts, Whale Map, Whale Alerts, Clank App, and Coincarp are a few of the essential tools for whale watching. In addition to this, programs like Solscan and Etherscan sit atop their own blockchains and include whale-tracking features.
With whale tracking, one may become as technologically sophisticated as feasible. The market’s response to a whale transaction, however, is not always predictable. Even if knowledge of whale behavior is helpful, it is only one factor that will have an impact on how cryptocurrencies are priced. This is particularly true in a market when macroeconomic variables dominate.
