Within the world of cryptocurrencies, large wallets are key elements due to the role they play in the market. These entities, known as whales, also have a strong presence in the particular sector of memecoins. In this analysis, we review some of the most common trading strategies of these investors.
To understand the so-called whales, it is important to start from the premise that they are predominantly speculative actors. Their main objective is to maximize profits, which is why they often anticipate market movements. This approach is the starting point for all their strategies.
Market manipulation strategies of memecoin whales
The low liquidity and strong community component of many memecoins give whales a greater ability to manipulate than in more established cryptocurrencies like Bitcoin or Ethereum. Here are some of their most common strategies:
Pump-and-dump: this involves quietly accumulating large amounts of tokens. Once the position is complete, they generate excitement on social media through influencers and paid posts, provoking euphoria and massive capital influx. The whale sells its positions, obtaining significant profits, although many retail investors are harmed.
Wash trading and false volume: this tactic involves coordinated trading among whales, often through bots, to simulate high trading volume and attract investors.
Liquidity manipulation: by controlling liquidity pools on decentralized exchanges, whales can generate high volatility and slippage, making it difficult for other users to enter or exit their positions.
Front-running and bots: through algorithms and trading bots, whales can get ahead of retail trades by exploiting the transparency of networks like Solana or Ethereum, where it is possible to view transactions before their confirmation.
Ultimately, memecoin whales rely on multiple strategies to influence the market. Understanding their way of operating is essential to identify risks and, at times, take advantage of opportunities that arise in this sector.