With the growing adoption of blockchain technologies, more and more users are getting eager to explore the full amount of capabilities presented by virtual money. This brings them a lot of benefits not only in terms of fast and cheap transactions but also from the perspective of further returns, as digital assets will keep growing. Considering the unstoppably growing popularity, we thought it would be useful for you to familiarize yourself with the core concepts of dynamics of cryptocurrency ownership by getting familiar with the peculiarities of crypto whales’ activities and their current influence on the entire industry.
Introduction to the Term
The term “crypto whale” is a special expression referring to companies of private investors who possess large volumes of a particular cryptocurrency. In simple words, these are the largest holders, whose decisions might pose a major importance for the entire community due to their buying and selling power.
Currently, there are no dictionary terms that would clearly define who can be considered a crypto whale and who cannot. Nevertheless, it’s widely accepted that the major holders of Bitcoin, for instance, are the ones who own at least 1,000 tokens, which exceeds $30 million at current rates.
To make it more clear, let’s take a closer look at the exact digits that show the real significance of top players on ecosystems. According to recent studies, 10,000 investors hold 5 million bitcoins out of the whole 19 million supply, which is around 25%. Even in this small group, there are holders that own the major capital — 15% of all coins in circulation belong to 100 wallets.
The influence of top players is even bigger in smaller projects. Studies report that, as of June 2023, around 75% of DOGE supply is held by only 14 users, which makes it highly centralized and speculative. That’s the major reason why financial experts claim that the biggest meme coin cannot be called a real financial instrument.
Realizing the big importance of whales, buyers are bound to constantly keep track of the cryptocurrency supply and distribution in order to avoid making investments in heavily centralized projects as this may pose major risks to their funds and lead to unexpected volatility.
How they Affect Prices
Big holders can significantly impact value volatility, particularly when they engage in substantial transactions. When they move a substantial amount of coins in a single money transfer, it can facilitate big shifts. This is particularly evident in Bitcoin, where the lack of liquidity and the big amount processed in the money transfer operation can exert downward pressure on its value if the holder attempts to exchange their digital coins for fiat money. Other smaller owners get anxious and observant when they witness such operations, closely monitoring indicators that suggest influential participants are “dumping” their possessions.
Investors interested in the digital sector often keep an eye on the exchange inflow mean, which represents the median number of tokens transferred to crypto exchange platforms in the form of deposits. If the mean volume per transaction is higher than 2.0, it indicates that whales are likely to initiate selling.
As a result, the actions and behaviors of whales can have a profound impact on the sector of digital assets, and that’s why its participants have to closely monitor their activities and announcements for potential implications on price movements.
Top Projects Preferred by Whales
If you are very anxious about the heavy centralization of cryptocurrency ownership, we suggest that you should be aware of projects preferred by crypto whales. Note that this doesn’t mean that these are bad cryptocurrencies to invest in. This is just a suggestion on where to expect high price fluctuations (either ups or downs) in the nearest future.
Cardano
The ADA token is becoming a popular investment option among cryptocurrency whales because of the cutting-edge technical features offered by the Cardano blockchain. Big investors see that Cardano can benefit from its strong focus on scalability and sustainability and that’s why they make investments in the hope of generating big gains.
Solana
One of Solana’s standout features is its remarkable speed, positioning it as one of the fastest blockchains globally. This speed facilitates swift transaction processing and seamless execution of smart contracts, enhancing user experience and enabling real-time interactions within the Solana network.
Chainlink
Top cryptocurrency players find Chainlink a promising investment due to its secure connection of smart contracts with off-chain data and services, which helps to eliminate one of the most common blockchain issues — a lack of compatibility. This solution can bring profits in the future and top crypto investors can clearly see this today, meaning they can make a good fortune even without price speculations.
Related: 8 Things To Look For In A Cryptocurrency Platform
