Whales are held responsible for sudden price swings in the crypto and traditional markets from time to time. Given their ability to manipulate market prices, this becomes paramount for general Bitcoin (BTC) investors to understand the nuances that make a person a whale and their overall impact on trading.
Wallet addresses containing large amounts of BTC are identified as Bitcoin whales. Dumping or transferring large amounts of BTC from one wallet to another has a negative impact on prices, leading to losses for small traders. As a result, real-time Bitcoin whale tracking enables small traders to make profitable trades in a fluctuating market.
Despite the global and decentralized nature of Bitcoin, researching and monitoring whales simply boils down to accessing readily available trading data from crypto exchanges and services. There are four main ways to track whale activity, including monitoring known whale addresses, order books, sudden changes in market capitalization, and transactions on crypto exchanges.
Monitoring known whales provides a head start for small investors, as the likelihood of encountering a whale trade increases dramatically. Additionally, tracking market changes via order books and trades on crypto exchanges indicates incoming whale trades, which can be leveraged to profit during volatility.
— Whale Alert (@whale_alert) July 16, 2022
The crypto community also uses free services that inform investors about successful whale trades, often including information about the sender’s and receiver’s wallets and the amount. One of the most popular services for automatically tracking whale trades is @whale_alert on Twitter, which issues alerts related to large transactions, as noted above.
In a recent market update, Cointelegraph revealed that on-chain data suggests that the biggest Bitcoin hodlers are reluctant to act at current prices. BlockTrends analyst Caue Oliveira supported the above finding by highlighting continued “hibernation” among the whale portfolio. He added:
“Institutional movements, or commonly referred to as ‘whale activity,’ can be tracked based on the volume of trades moved over a short period of time, both denominated in BTC and USD.”
Additionally, many altcoins continue to mimic Bitcoin’s bearish trends as whales wait for greener sentiment in the crypto market.