This figure is even more inequitable than estimates that 1% of the world’s population controlled 50% of the world’s wealth, which calls into question the possibility that cryptocurrencies solve the problem of centralization of wealth.
The advantage of hodling whales
Cryptocurrency prices are known to be volatile, mainly because there are a large number of individuals. Unlike whales, retail investors tend to panic sell based on fear of risk rather than market fundamentals.
Bitcoin whales, on the other hand, have a more lucid approach. 64 of the top 100 bitcoin wallets have not withdrawn or transferred BTC in almost 10 years, despite market cycles. Thanks to this, the price of Bitcoin has become correlated with the stock market, as whales show that holding cryptos is similar to “traditional” investments. And it made Bitcoin price more stable compared to other cryptos.
With great power…
Due to the importance of Bitcoin holdings, whales can virtually dominate the market and steer prices in one direction. One of these tactics is called a sales wall, whereby a whale places a massive sell order at a lower price than other sell orders. As a result, retail investors panic and sell their holdings, driving prices down and allowing the whale to scoop up more BTC at a lower price.
Fortunately, thanks to websites like Whalemap and Twitter accounts like Whale Alert, more users are aware of these activities and can avoid falling into the trap. Nevertheless, whales still have a lot of control over the Bitcoin market and can essentially manipulate prices.
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Alm Maye has been a trader and analyst since 2013. He is an expert in equity markets, Forex and cryptocurrencies. He is the creator of Almvest.com and Imveste.com, two sites dedicated to personal finance. He participates in the development of feature articles on specialized sites such as Actions-boursieres.fr, as well as the international network of Finixio.com.