Bitcoin whales and how they make the bitcoin market waves
Aug 01, 2017 Posted / 1821 Views
Since its inception in 2009, bitcoin has become the first decentralized digital currency all over the world. Released as an open source software, the system is peer-to-peer, that is transaction takes place between users directly, without an intermediary. Bitcoin is being exchanged for other currencies in every part of the world. From 2012, there has been a significant rise in bitcoin's utility as an investment. Investments has been made in the form bitcoin funds, venture capital and has also been a great magnet for criminal activities.
A parallelism can be drawn between an ocean and market. Like an ocean, market is vast and includes both big and small investors, similar to small fish, big fish and whales. As in an ocean, whales are the largest living creatures, who can overpower small and medium sized fishes due to their size, similarly bitcoin whales are the most wealthiest or influential investors- those who hold bitcoins in abundance, they can sway the market according to their preferences. Particularly the term whale has been used for these wealthy and influential investors because as the whale influences the survival of other fishes in the ocean, correspondingly bitcoin whales with their vast holdings influence the pool of small and medium traders with just few tricks. It has been assumed that Satoshi Nakamoto may be the biggest whale of all as the creator allegedly owns one million bitcoins. Waves have been a metaphor for the market moves. The waves create din market by these Whales make an impact on all the other traders and decide their course of action. Traders with extensive holdings start selling their bitcoins for a price lower than the market value, and hence cause panic amongst the small time traders.
As they watch the panic ensue among the small and medium investors, hysterical selling takes place which makes the bitcoin price reach a new low. During this low price phase these whale investors scoop more bitcoins than they initially started out with. Some 'Dark pools' or ' off the record' trades help such whales to bluff with buy and sell walls or facilitate them in purchasing large amounts of bitcoins without grabbing public's attention.
A similar case happened in 2014 where an investor liquidated 30,000 bitcoins. It was strongly speculated that it would wreck a havoc in the market. But instead the order was ripped through by buyers and subsequently the price of bitcoins rose significantly. This event has been recorded in history and will be remembered forever.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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