How can we help you?
We try to answer any question about our platform, blockchain and digital currencies in general, and articles up for discussion.
Just like a whale in the ocean is the largest mammal, a crypto whale is the largest investor of a coin. Therefore, a large stake equates to large amounts of power and the ability to influence. Similar to the ideology behind proof-of-stake consensus.
It is most likely that when a coin fluctuates from a high price to a sudden drop, one or many whales together are influencing the value of the coin.
How can a Whale influence the value of a coin?
The supply of coins is fixed. Therefore, if a whale holds majority of a coin, the remaining supply of the coins is limited. Thus, driving up the price of the coin. If a whale decides to sell a large portion or all of their holdings, the demand of the cryptocurrency drops as large amounts of the coins become available. This results in a prior drop of the coin in order to reach a new equilibrium.
Afterwards, whales can buy large amounts of the coin at a much lower price. Hence, increasing demand again and thereby price.
Who can become a whale?
Anyone can become a whale. To become a whale one does not need large amounts of money. Big Initial Coin Offerings (ICO) sell their tokens at a very low price. If you trust the project and believe that the token will increase in price later, your buying decision has the potential to make you a whale.