Crypto whales explained – the powerful crypto forces able to ‘manipulate’ tokens

Cryptocurrencies like Bitcoin are 'apolitical' says financial expert

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Cryptocurrencies exist as an alternative to their fiat counterparts that people mint and add to ledgers themselves. Developers have made them decentralised by nature, preventing tampering and manipulation by outside forces. But they still fall prey to people or organisations able to use their money to carve up the market.

The cryptocurrency community knows them as “crypto whales”.

Speaking to Express.co.uk, Dragos Dunica, Co-Founder of DappRadar, a top-ranked store for decentralised apps, explained how they work.

He said cryptocurrency whales hold “large amounts of cryptocurrency”, whether in alternative and established tokens.

As they collect more tokens, they grow powerful enough to “manipulate the valuation of a given cryptocurrency”.

The considerable influence makes them “hugely influential”, according to Mr Dunica.

Although crypto whales may seem to possess an unfair advantage, smaller time investors can take advantage of them.

Mr Dunica explained: “Smaller investors may track whale movements in order to preempt changes in the price of a cryptocurrency.”

“Whale movements refer to a signal sent by a whale that can alter the price of a cryptocurrency.”

“For instance, if a whale decides to sell a large amount of their currency for a comparatively low price, this can make the currency as a whole more volatile, causing the price to fall.

“This may enable them to buy more of the currency at a low price, and then, once they stop selling, the currency will stabilise again.”

According to market directions, whales have recently made waves in bitcoin.

Traders with at least $50 million (£36.3 million) of the cryptocurrency in their wallets have increased holdings over the last three months.

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Their activity means bitcoin will likely stay strong, provided it treads water above its average, according to Daniela Hathorn, a market analyst at foreign exchange firm DailyFX.

She said: “The positive trend isn’t in any trouble as long as bitcoin stays above its 200-day moving average at $45,750 (£33,236).

“Looking ahead, the key challenge for buyers will be to cement further gains towards $55,000 (£39,956) without losing momentum along the way.”

Mr Dunica added some whales also take advantage of the lack of regulation in the crypto market.

Some may opt to use tactics that might otherwise be illegal in other markets.

He said: “Alternatively, whales can also buy large amounts of currency at high price, which may catalyse a spike in the value of the coin, as smaller investors try to buy coins to make the most of their rising value.

“In more traditional markets, these tactics may be illegal, but as regulation is still sparse in the world of crypto, whales are still free to exert this kind of influence.”

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