Several significant asset holders could influence the price of most cryptocurrencies. It is beneficial for active traders and investors to comprehend the market behaviors of these whales.
Large cryptocurrency holders are referred to as “crypto whales.” They can be people or organizations and frequently own more than 10% of cryptocurrency. For instance, because MicroStrategy participates in the market and owns almost 130,000 Bitcoin (BTC), they have the power to influence the price of BTC. As a result, keeping tabs on crypto whale activity offers timely information about a cryptocurrency asset’s price movement.
Not only is this a crypto phenomenon. In conventional markets, an asset’s price will rise or fall depending on whether a significant player like Warren Buffett, a company, or a hedge fund discloses that they have purchased it. The market usually reacts to these players selling an asset.
All transactions involving cryptocurrencies and nonfungible tokens (NFTs) occur on the chain. Because of blockchain’s transparency, whale-owned wallet transactions can be identified by the size of their cryptocurrency positions. The behavior of the larger market can then be predicted by tracking these wallets.
What does whale tracking in crypto mean?
The activities of crypto whales can be tracked using specialized tools. These tools can offer analytics on whale activity and, in some cases, help the user make investment or trading decisions.
Cryptocurrency traders and investors continuously monitor the volume of cryptocurrencies entering and leaving exchanges. Large-scale transfers of cryptocurrencies like Bitcoin or Ether (ETH) into a business are typically accompanied by sell activity, which lowers the price. On the other hand, if cryptocurrencies move from exchanges into wallets, it is thought to be a sign that prices are about to increase.
A whale could frequently purchase cryptocurrencies on a business and transfer them in bulk to their wallets. This might lead to a bullish price movement for the cryptocurrency. This is so that prices can rise when there is a high net outflow of cryptocurrencies from exchanges, which results in a reduction in supply.
In certain circumstances, whales may decide against influencing the markets by making purchases or sales on an exchange. They would conduct an OTC transaction involving two wallets. By sending Bitcoin to a wallet that will return USD Coin (USDC), they could sell BTC without the market noticing the transaction.
Investors can examine a significant transaction recorded on the blockchain to identify the wallets involved. The wallets can be called crypto whale wallets if they hold significant cryptocurrency positions. From then on, keeping an eye on these wallets and the transactions made there can help analyze the cryptocurrency’s price changes.
The NFT markets can also benefit from whale tracking. Large holders of the collection are present in most NFT communities. The local community frequently recognizes these NFT holders. Investors can make prompt buy/sell decisions by monitoring the movements of these whales’ wallets.
Throughout the NFT bull market in 2021, Gary Vaynerchuk’s actions were repeatedly observed. For instance, high convictions may be indicated if a renowned NFT collector or a whale destroys a nonfungible token collection. That would be noticed by NFT collectors and the whale, who would then buy the nonfungible tokens.
Even if it’s just for one cryptocurrency or NFT collection, manually keeping track of whale activity can be overwhelming and time-consuming. Tools for tracking whales can be helpful in this situation.
What purposes do crypto whale tracking tools serve?
Due to blockchain’s transparency, investors can identify wallets that whales own and track them for buy and sell activity with the help of whale tracking tools. The use of tracking tools aids in the automation of the tracking process.
The majority of cryptocurrency owners have multiple cryptocurrencies in their portfolios. They will need to locate and keep tabs on several wallets that store significant amounts of the cryptocurrencies they are interested in to stay informed of market movements. On-chain analytics tools provide this functionality.
When a whale wallet commits a transaction, tracking tools immediately identify them in the blockchain and alert the user. These tools can also find transactions more significant than a specific size, enabling users to see the whales in the crypto ecosystem.
The lowest price for a nonfungible token (NFT) is the collection’s floor price. Sometimes the floor price decreases when there is little demand for an NFT collection. Similarly, NFT collections can be monitored for events like the floor sweep, the sale of NFTs at the bid price, and the listing of new nonfungible tokens below the floor price.
One NFT holder will frequently list their NFT below the floor price to start the decline in floor prices.
Therefore, such behaviors can be identified using whale tracking tools so that investors can be aware and take appropriate action.
On the other hand, a floor sweep suggests a high demand for an NFT collection. This describes purchasing numerous nonfungible tokens from a group that is being offered for sale at the floor price. When a whale’s wallet sweeps the floors of a new collection, whale tracking tools can detect it. Investors in NFT will be made aware and then be able to follow the new collection.
What are the typical crypto tools for tracking whales?
Investors can spot whale activity and make prompt and informed decisions using whale tracking tools like Whale Watchers, Whale Bot Alerts, and others.
The capabilities of whale tracking tools vary; some are as simple as a window on top of a blockchain, while others have analytics and charting abilities across multiple blockchains. While some only offer NFT whale tracking, others also cover crypto whale tracking.
While some analytics tools only offer users basic analytics and alerts on whale activity, others offer more in-depth learning opportunities on charts and analytics. Some only provide a direct feed, while others use Twitter and Telegram to inform users.
Whale Watchers, Whale Bot Alerts, Whale Map, Whale Alerts, Clank App, and Coincarp are essential tools for whale watching. In addition, programs like Solscan and Etherscan sit atop their respective blockchains and provide whale-tracking features.
With whale tracking, one can become as technologically savvy as possible. However, the market’s response to a whale transaction is only sometimes predictable. Even though knowledge of whale behavior is practical, it is only one factor that will impact how cryptocurrencies are priced. This is particularly true in a market where macroeconomic factors dominate.