The beginning of cryptocurrencies has not been phenomenal but also not very bad. The market’s overall value has slumped by a considerable amount, and analysts are predicting a cryptocurrency crash in the beginning only. However, cryptocurrencies struggling at the end and beginning of a year is not new.
As in 2018, the combined value of the cryptocurrency market slumped by almost 80% at the beginning of the year only. People have alleged many factors for the struggling phase of the cryptocurrency market.
One common factor alleged for the bearish run of cryptocurrencies is the bitcoin whale. Bitcoin whale is one of the famous slangs in this market, but not many cryptocurrency investors are familiar with this term. Check the tips for running a successful bitcoin campaign to acquire a complete flash guide to bitcoin trading. Let’s find out what a bitcoin whale means and its potential to crash the cryptocurrency market.
- The two most popular and leading bitcoin whales hold more than 2% of BTC in circulation.
- Bitcoin whales are also famous as big baggers; the actions of bitcoin hale seems to have a significant impact on the entire market. Bitcoin whales are responsible for skyrocketing volatility, slumping the liquidity.
- There are many bitcoin whales; any individual holding more than 1500 BTCs in the wallet is famous as a BTC whale.
Understanding bitcoin whale!
As discussed above, bitcoin whales are also famous as big baggers. The name suggests these investors’ nature as they hold a significant amount of bitcoin’s most demanding and exciting digital currency.
Think of the cryptocurrency market as an ocean, cryptocurrency investors and traders as fishes. It explains the dominance of bitcoin whales in this ocean. Prominent investors are referred to as whales because the movement of whales in an ocean affects the movement of other creatures present in the same ocean.
Only bitcoin whales are holding 80% of bitcoin’s existing supply. Currently, there are 20% of bitcoin whales out of many investors. Even countries like El Salvador falls under the category of bitcoin whale.
As per a report, the top five most enormous bitcoin whales still hold more than 5% of bitcoin circulation. Robust examples of bitcoin whales are Satoshi Nakamoto and Tim Draper. Satoshi Nakamoto is rumoured of having the maximum number of BTCs as he is the mastermind behind BTC.
How can whales damage the potential of digital coins?
People think that whales can only affect the credibility of cryptocurrencies by lowering the market value. However, whales are lowering the market value of a cryptocurrency by selling off their assets in one go and are responsible for a giant slide in liquidity.
The majority of the whales are the early mover of this market, and only a few have become whales in the past one or two years. These early movers have been holding their assets for a very long time, thus lowering the liquidity of these tokens.
You might wonder who lower liquidity can affect the credibility of cryptocurrencies. The lower liquidity of cryptocurrencies accounts for one of the leading factors for deepening volatility. Many investors prohibit investing in such currencies due to the wild, volatile nature, and this is how whales lower the credibility of cryptocurrencies.
Can a bitcoin whale crash the market?
A bitcoin whale cannot directly crash the market but can initiate panic sell in the marketplace. For example, a bitcoin whale sells most of its holding, lowering the market value. A lower market value will make the paper hands and new investors panic.
After seeing a slump in the spot price of BTC, these investors will sell off their holdings, and it will further intensify the price slump, which is how a bitcoin whale can be responsible for a cryptocurrency market crash.
As a result of low liquidity, bitcoin has become very volatile. Still, as per the reports, bitcoin is the least fluctuating cryptocurrency of all time. Therefore, the only solution to eliminate the dominance of cryptocurrency whales is the burning of tokens. The existing supply is sent to the nonfunctional wallets indefinite amounts in burning. The eaters are wallet addresses having no access to private keys.