“Whales” in the context of trading platforms like Binance, are investors or traders who own very large amounts of cryptocurrencies. These individuals or entities could be wealthy individuals, investment funds, or large corporations. Here is a detailed explanation of the role and influence of whales in the cryptocurrency market:
1. Large trading volume: Whales own huge amounts of cryptocurrencies, which means that any movement they make in the market, whether buying or selling, can greatly affect the price of the currency.
2. Market influence: Due to their large trading volumes, whales can manipulate currency prices. For example, if a whale decides to sell a large amount of Bitcoin, this could cause the price to drop significantly. Conversely, if he buys a large quantity, he can raise the price.
3. Strategies and tactics:
Dumping: When a whale sells a large amount of currency quickly, leading to a sharp drop in the price.
- Pumping: When a whale buys a large amount of currency, which leads to a rapid rise in the price.
- Market manipulation: Whales can use strategies such as “false ordering” where they place huge buy or sell orders to give a false impression of supply or demand, thus influencing the decisions of other traders.
4. Psychological impact: The presence of whales can create a feeling of uncertainty or tension among smaller traders. For example, if traders notice significant selling, they may rush to sell their assets to avoid losses, further declining the price.
5. Role in liquidity: Although the influence of whales can sometimes be negative, they also contribute to increasing liquidity in the market. Their large trades mean constant activity and movement, which can facilitate the buying and selling process for other investors.
Real-life examples: Sometimes, large movements may be observed in the cryptocurrency market associated with large transactions by known whales. These movements can be tracked by tracking large wallets on the blockchain, as every transaction is public and can be seen.
In short, whales are an important part of the cryptocurrency ecosystem, and their influence on prices and market trends can be significant.