They are spotted from time to time and their appearance is always an impressive spectacle – at least for those who know their way around the market. We are talking about so-called “Crypto Whales”. These are persons or organizations that hold a very large amount of a specific crypto currency.
Concentration of power instead of decentralization
Crypto currencies were originally created to strive for a decentralization of wealth. In reality, however, crypto currencies show strong parallels to the classic financial market.
According to a study by OXFAM, the richest 85 people own as much wealth as the poorest 50% of the world combined. A similar unequal distribution of wealth exists in the crypto-market. As the data analysis company IntoTheBlock has found out, only 321 wallets hold the majority of the crypto currencies in circulation.
There are 39 Bitcoin whales, which hold 11.1% of all Bitcoins. A comparable picture is presented by looking at the second most popular currency: Ethereum. 154 wallets manage about 40% of the ether in circulation. In the case of Litecoin, the concentration is even more serious: 128 whales carry 47% of the quickly transferable crypto currency.
Whale sightings unsettle the market
The market often reacts very unsettled when a whale is sighted. The reason for this is obvious: Due to the large masses that such whales carry, they have the potential to manipulate market prices. This is a fear that always flares up again for many crypto traders when a whale sighting is reported. They follow websites that specialize in the discovery of such whales.
In practice, however, this concern is usually unfounded. Most whales try to expand their mass and do not simply sell a large portion of the coins they hold. Ultimately, a massive sell-off can lead to a significant drop in price. The result: the value of the coins held by the whale will decrease.