Significance of Cryptocurrency Whales
Cryptocurrency whales or simply ‘whales’, refer to a group of entities or individuals who own huge amounts of crypto, so much that they can influence currency markets just by their participation. In the cryptocurrency sea, whales hold a substantial amount of cryptocurrency in their wallets and they make waves for the smaller fishes to follow, they can either send the value of a cryptocurrency up or down.
It is important as a crypto investor to pay close attention to the activities of whales as they can significantly influence the market with their trades.It is said that when a crypto whale or crypto whales’ sneezes, the whole blockchain can catch a cold. They have a strong impact on blockchains that run on a proof-of-stake protocol as bigger amounts of staked funds lead to more voting power.
Due to the fact that they hold very huge amounts of cryptocurrencies, most crypto whales avoid trading on traditional crypto markets, given that their heavy transactions might be too intense for the liquidity of trading volumes. However, they engage in over-the-counter (OTC) crypto trading, where they buy and sell crypto to each other, repeatedly off-chain.
Crypto whales are most likely individuals or group of large organizations with high net worth. Some examples of popular crypto whales include: Brian Armstrong, Changpeng Zhao, Winklevoss twins, Falcon Global Capital, CoinCapital etc. The role crypto whale trackers play is similar to that of influencers or celebrities. Fans or followers tend to imitate the outfit or buy the idea of their influencers.
Just like in the traditional market when someone a popular brand or famous person discloses that they have an interest in purchasing a particular asset, the price for such an asset moves up rapidly and vice versa.
Basically, investors or participants follow the movements of crypto whales in the crypto market. Given that all transactions regarding cryptocurrencies and NFTs are on-chain, transactions executed by wallets owned by whales can be identified by the size of the crypto positions they hold. Tracking the wallets can enable investors or traders to realize how the wider market could act.
What is crypto whale tracking?
Having established the fact that every transaction performed by whales can affect the market, it is thereby necessary to observe or capture the movements of the whales in order to decide on which investment to make.
Crypto whale tracking involves solutions provided to track or monitor the activities of crypto whales. A crypto whale tracker is a tool that aids investors or traders in making investment choices by observing and analyzing the whales’ market movement.
Crypto whale tracking involves the process of monitoring large transactions of cryptocurrencies, in order to identify the behavior of individuals or organizations (the whales) that hold significant amount of digital assets. Through the process of tracking the activities of whales, analysts and traders can gain insights into market trends, potential price movements, and investor sentiment which are all beneficial for making knowledgeable decisions about buying, selling, or holding cryptocurrencies.
If for instance a whale is buying large amounts of a particular cryptocurrency, it may show that they have a positive outlook on the market and believe that the price of the cryptocurrency will eventually rise.
Following the recording of a large transaction on a blockchain, investors get to observe the transaction and identify the wallets involved in it. The wallets are labeled “whales” if they have large cryptocurrency positions.
Crypto whale tracking can also be particularly essential for NFTs. By tracking whale activities, investors can gain insights into which NFTs are popular and which ones are traded regularly, to enable them make informed decisions about buying or selling an NFTs. If for example a whale shows an interest towards an NFT collection, this could point to high convictions and thus, flooding the room with collectors.
Having established the importance of crypto whale tracking, it is crucial to regularly track the behaviors of these whales but this activity can be too tasking and time consuming to carry out manually, hence the introduction of whale tracking tools.
What are crypto whale tracking tools used for?
So instead of manually engaging in an exhausting activity, crypto tracking tools makes it easier.
Crypto whale tracking tools are software platforms or services that lets users monitor the buying and selling activities of whales in the crypto market through an automated tracking process. These tools make use of several metrics and data sources to offer insights into whale activities, market trends, identify potential price manipulations etc.
The on-chain analysis works by inspecting blockchain transactions. In the analysis, the transaction values and block sizes are assessed. Through on-chain analysis, you can examine the wallet addresses involved in a transaction, find out if the wallet belongs to a whale and you can also see where the whales send the crypto to. Some on-chain analytic tools are; Glassnode, Chainalysis, Coin Metrics, CryptoQuant etc.
What a crypto whale tracking tool or program does is to translate the raw hash (the primary transaction data on the blockchain) into understandable words and numbers. Each of the whale tracking tools extracts the blockchain’s raw data, decodes it, scrutinizes it, and gives a report on the activities of the largest cryptocurrency holders and traders.
Tracking tools examine through a blockchain, and when a whale wallet commits a transaction, these tools spot them in real time and alert the user. NFT collections can be tracked as well through the listing of new NFTs beneath floor price, sale of NFTs at bid price, floor sweeps etc.
Whale tracking tools can be used here to identify when one NFT holder lists it below the floor price and also to spot when a whale’s wallet sweeps the floors of a new collection, alerting NFT investors and traders to start tracking the new collection.
Summarily, using a crypto whale tracking tool aids in the quick identification and understanding of market trends and conditions, to enable investors make better and well-informed decisions regarding their investments.
What are the common crypto whale tracking tools?
There are several crypto whale tracking tools and they are important for monitoring the activities of the ‘whales’ in the crypto market, in order for investors and traders to make informed decisions regarding their cryptocurrency holdings.
These crypto whale tracking tools differ in their capabilities and processes. While some can operate across multiple blockchains and are more complicated others cannot and can be simple to manage. Some tools only concentrate on crypto whale tracking while others include NFT whale tracking.
Among the main tools for whale watching are Clank App, Whale alerts.io, Whale map, Whale Bot Alerts, Coincarp etc. Etherscan and Solscan also provide whale-tracking features to their individual blockchains. Crypto whale tracker tools help investors to monitor large movements that could lead to the rise or drop of the value of a currency. So, with the aid of the tools, traders can carefully calculate when their movements as to increase profits in the crypto market.
Investor’s reactions towards the observed transaction of a whale changes the value of digital assets. It is important to understand the motives of a whale before making any investment decision. Putting a large amount of a currency into an exchange doesn’t always mean crypto whales are dumping it.
The value of the currencies will drop significantly if people assume wrongly and act on it. Crypto whale tracking tools has proven to be the quickest and easiest way to track whale behaviours and understand the blockchain data.
