Whales in the cryptocurrency world are individuals or entities that own large amounts of cryptocurrency, and their influence on the market is often very large. Their large movements in the market can lead to extreme price fluctuations, either up or down, causing instability. These fluctuations can be a major cause of so-called “catastrophe months” or periods of sudden collapse in the value of currencies.
The problem is that whales have the ability to directly influence the markets due to the size of their investments. For example, if one of them decides to sell a large amount of their coins at once, it could cause a sharp drop in prices, prompting other traders to sell for fear of further losses. Conversely, if a whale decides to buy large amounts, it could cause prices to rise suddenly.
One of the most important issues in this context is the so-called “pump and dump” where whales artificially inflate the price of a currency, then sell their large quantities when the price rises, leaving small investors with a huge loss. Sometimes, these moves are so calculated that only large investors benefit from them, while small investors are exposed to high risks.
