Should crypto investors worry about Bitcoin whales?

Many crypto investors will be familiar with the term Bitcoin whales. Investors holding extremely large amounts of Bitcoin are often referred to as whales. The wallets with around $1 billion are usually referred to as whales. 

Putting any future price target on Bitcoin is notoriously difficult due to these whales being blamed for unexplained market phenomenon. 

The large cryptocurrency investors or whales will usually accumulate crypto at much lower prices then start a sell-off to capitalise on this sustained growing demand.

On Monday, Bitcoin is trading at $10,093. There have been reports whales are bidding around $8,000 to purchase Bitcoin on crypto exchanges following a sharp drop to sub-$10,000. 

Occasionally the Bitcoin whales will come out to play and whenever the price of BTC begins to increase, the speculation begins to start. Is it price manipulation? Is it wash trading? Are the whales manipulating the market? 

In a previous column for Kitco News, I explained the popular investment strategies and trading manoeuvres Bitcoin whales will use to profit, such as the trading tactic commonly called the “rinse and repeat cycle.” 

This is when a trader or whale with huge holdings starts selling bitcoins lower than the market rate which causes a panic sell off by small-time traders. The whale will then have sold just below the current market value and enough to watch panic ensue. Then the whale waits and watches the panic selling take place until the Bitcoin prices reach a new low. This is the time when the whales quickly scoop up more Bitcoins hence the term ‘rinse' and then ‘repeat.’

There have been changes in the number of Whales hiding Bitcoin. Data from Glassnode shows the percentage of supply owned by entities holding 10 BTC grew from 5.1% to 13.8% in five years, while the percent held by entities with 100-100k BTC declined from 62.9% to 49.8%.

CoinShares' CEO, Jean-Marie Mognetti recently discussed in a note whether the $10,000 mark is sustainable, and identified there are a number of key data points that are positive in his view.

Mognetti writes the number of active wallets continues to increase with 10% of these wallets holding at least 1,000 dollars of Bitcoin (and 27% hold at least 100 dollars of Bitcoin), indicating that a greater number of people are starting to test the water in this digital asset.

 The increased interest in Bitcoin futures also allows investors to speculate on the future price of Bitcoin. The Chicago Mercantile Exchange (CME) offers monthly contracts for cash settlement. Derivative volumes also continue to grow at pace. The CME recorded all-time highs in future contract open interests, and record trading volumes on future and option contracts. Most recently Bloomberg reported Paul Tudor Jones has exposure to bitcoin via CME futures in his hedge fund.

Mognetti highlights applications such as Square’s Cash App and CFD Providers in Europe are showing record sales and trading volumes for the forest quarter. Whilst the former represents physical ownership and the latter is more speculative, both present solid evidence the market is showing more and more interest in bitcoin.

In the first-quarter of 2020 specialised digital asset bank, Silvergate, reported 850 institutional clients and a 75% increase in their transaction volume. 

For the savvy investors keen to follow the flow of BTC there is also a crypto data oracle live on Twitter sharing huge transactions – “Whale Alert.” which tracks large and unusual transactions to and from exchanges. 

One notable move recently took place on August 31. Whale Alert tracked several large transactions totalling more than $235.6 million worth of BTC, ETH, and XRP. The largest Bitcoin transaction sent 3,050 BTC, worth $35,844,616, from Binance to an unknown wallet.

The large movements of BTC to unknown wallets could at times signal the setting in an accumulation period. When a large Bitcoin holder sells large quantities of BTC, the price may fall if it is placed at the market price. If a large investor places a large buy order for BTC at the market price – the price rises and he/she buys at a high price. In this current environment prices are open to manipulation and with the crypto market remaining largely unregulated many institutional investors or whales are always watching from the sidelines.

Looking for your next crypto casino? Check out: Bitcasino, 1xBit or FortuneJack.

Written by Roman


Roman is a big crypto enthusiast and a bigger sports fan, so crypto sports betting comes as a major interest for him. Has been involved with the gambling industry since 2017 and sees crypto as a major breakthrough for the payments side, specially beyond first world countries.

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