Whales are responsible for sudden price fluctuations in the crypto and traditional currency markets from time to time. Due to its ability to manipulate market prices, it becomes crucial for general Bitcoin (BTC) investors to understand the nuances that make one a whale and their general impact on trading.
Wallet addresses containing large amounts of BTC are identified as Bitcoin whales. Dumping or transferring large amounts of bitcoin from one wallet to another negatively affects prices, which leads to losses for small traders. As a result, real-time tracking of bitcoin whales allows small traders to make profitable trades amidst a volatile market.
Despite the global and decentralized nature of Bitcoin, tracking and monitoring whales simply boils down to having access to readily available trading data from crypto exchanges and services. There are four primary ways to track whale activities, which include monitoring known whale addresses, order books, sudden changes in market capitalization and trades on cryptocurrency exchanges.
Well-known whale watching provides a solid start for small investors as the likelihood of encountering the whale trade increases dramatically. Moreover, tracking market changes through order books and deals on cryptocurrency exchanges indicates incoming whale trades, which can be leveraged to profit during volatility.
The cryptocurrency community also uses free services that inform investors about successful whale trading, often including information about sender and receiver wallets and the amount. One of the most popular services to automatically track whale deals is @whale_alert on Twitter, which issues alerts related to large transactions as described above.
Related: Bitcoin Whales Still Dormant as BTC Price Approaches $21,000
In a recent market update, Cointelegraph revealed that on-chain data indicates that the largest providers of bitcoin have been reluctant to act at current prices. BlockTrends analyst Caue Oliveira supported the above finding by highlighting the persistence of “hibernation” among the whale portfolio. he added:
Institutional movements, or better known as “whale activity,” can be tracked based on the volume of transactions moved over a short period of time, and both are denominated in BTC and USD.
Moreover, many altcoins continue to mimic bitcoin’s bearish trends as whales await a greener sentiment in the cryptocurrency market.