Small whales are becoming increasingly popular in the cryptocurrency industry, particularly with Bitcoin.

 

Small whales are becoming increasingly popular in the cryptocurrency industry, particularly with Bitcoin.

Individuals, institutions, and exchanges that own large quantities of a cryptocurrency's tokens are referred to as whales. A whale account, for example, is one that has 1,000 Bitcoins or more in Bitcoin (BTC). Pantera Capital and Fortress Investment Group are two instances of well-known whales. Satoshi Nakamoto, who is alleged to have mined over a million Bitcoins, is another well-known—yet widely speculated—whale.

Bitcoin whales are similar to other prominent asset holders in that their actions have disproportionately large effects on the bitcoin market, either through higher volatility, lower liquidity, or a combination of the two.

Whales frequently place enormous sell orders on the books that are lower than other sell positions in the market, causing price instability and a chain reaction. When whales take their massive sell orders off the market or cause enough panic selling to put the price where they want it and amass more coins, stability returns. This practice is known as "sale walling."

What Is Bitcoin (BTC) and How Does It Work?

Bitcoin is a decentralized cryptocurrency that was first defined by a person or group of persons using the identity Satoshi Nakamoto in a whitepaper published in 2008. It was released in January 2009, only a few months later.

Bitcoin is a peer-to-peer internet money, which means that all transactions take place between equal, independent network users without the need for a middleman to allow or facilitate them. According to Nakamoto, Bitcoin was intended to facilitate "direct internet payments from one party to another without going via a financial institution."

Although there have been some ideas for a similar form of decentralized electronic money before Bitcoin, it is the first cryptocurrency to be used in the real world.

A single whale, or a group of whales, could potentially orchestrate a crash by selling a large number of coins to cause a wider market sell-off, then swooping in and buying the coins back at lower prices. Similarly, they might cause a short-squeeze, causing the asset's price to skyrocket and attracting regular investors, whose purchasing pressure intensifies the spike even more, boosting the value of the whales' holdings.

BTC's value, for example, surged from roughly US$4,200 to almost US$5,000 in under two hours on April 2, 2019. While this appeared to be a breakout for the lengthy consolidating chart, it really pointed to a single 20,000 BTC order that was completed on three distinct exchanges. This acquisition effectively shifted market sentiment and served as the catalyst for a rally that saw the top cryptocurrency rise by more than 240 percent by the end of June.

What is bitcoin mining, and how does it work?

Mining is the process of keeping the bitcoin network up and running, as well as creating new currencies.

All transactions are broadcast to the whole network, and miners combine large groups of transactions into blocks by performing a cryptographic computation that is incredibly difficult to create but very simple to verify.

What does bitcoin's future look like?

Janet Yellen, Biden's candidate for Treasury Secretary, has proposed that politicians regulate cryptocurrencies like bitcoin, citing fears that they are mostly used for criminal purposes.

According to Yahoo Finance, a Biden government might be pro-crypto due to the appointment of crypto specialist Gary Gensler as SEC chairman.

Nobody knows for sure if a cryptocurrency will recover from its current downturn or even exist in the future. Even huge cryptos like Bitcoin and Ethereum are not certain to thrive, thus it's still a very speculative investment.