The Crypto world is a big space with lots of things to learn. If you are a crypto investor, you need to understand the crypto whale and how they can affect your investment.
Let’s understand.
What are crypto whales?
Crypto whales are referred to as a group, person, or entity who have enough funds to influence the crypto market. These varieties of holders significantly affect cryptocurrency prices, making them advantageous for active investors and traders.
The phenomenon is not only true for crypto, but it is also widely used in the traditional market. For example:- the price of a coin goes up and down when any famous personality or brand announces its stake in an asset.
Consequently, market effects when a person sells an asset. Crypto whales usually hold so much of a crypto asset influencing currency value. Some whales have a specific percentage of an asset, while others have substantial percentages of different cryptos.
Why should be aware of the crypto whales
Wallets that hold cryptocurrency significantly can make a difference in the cryptos. Prices can go higher and lower, depending on the crypto activity. Crypto whale tracking tools can track market fluctuations and make more informed decisions.
When crypto whales hold large sums, it also causes liquidity problems, limiting the amount of the trade.
How to track whale activity?
On-chain analysis
On-chain analysis method of tracking crypto whale trades. The method uses analysis of the blockchain transaction. The process involves tracking the blocks and transactions at each block.
Wallet exchange transactions
Crypto whales often use wallets to transfer funds into different exchanges to make trades. These transactions have a positive and negative impact on the market. Stablecoins that move into wallets indicate good signs, while more volatility indicates they are dumping the coins.
Exchange to wallets transactions
Transferring the crypto from exchange to wallets has a safe side, reducing the amount of circulation. Usually, it increases the prices through scarcity. However, the prices can go down if the coin is stablecoin.
Wallet-to-wallet transactions
Tracking crypto wallets can be beneficial from an investment perspective. These transactions do not have much effect on the crypto prices.
How does a crypto whale tracker work?
A crypto whale tracker uses raw data from the blockchain to track the crypto whales and convert it into a visual representation so that users can understand it easily. The information on the blockchain uses DLT (distributed ledger technology).
The data blockchain is linked by a series of blocks where transaction details are protected. Once information is added to a block, it can not be altered or removed; it permits a permanent record of ownership.
Conclusion
Irrespective of crypto whale activities, you can track the market price movement. A crypto whale tracker can help inexperienced traders. If you are serious about your investment, you need to understand the things that affect the market prices.
