Robert Steinadler, a year ago
Blockchain technology allows analyzing transfers between users and even more important rich individuals. While these individuals remain unknown to the public it is interesting to watch their behavior. Even more important: How do they react to the latest dive of the crypto market that is closely following the stock market.
Why do we call them whales, what is their strategy and why is their behavior important for the rest of the market?
Most cryptocurrencies are following Bitcoins’ design when it comes down to supply. It is usually finite and limited to very low inflation that is occurring over decades and eventually leads to a point where the maximum supply of a token is minted.
The price is determined by supply and demand. If the supply is limited and only a few entities are in control, they have a significant impact on the market under the right circumstances. Entities holding large amounts of a cryptocurrency are called whales which is a reference to the size of their investments.
Some people even go that far to believe that whales control the market entirely. While this is possible in illiquid markets, cryptocurrencies like Bitcoin have very high liquidity which makes it hard if not impossible to manipulate them.
Some investors believe that it is important to watch the behavior of larger market participants. There are even a couple of services and social media bots that are actively watching every move making it visible to the public.
The latest data shows that the 1000 biggest entities on Ethereum are holding large amounts of FTT and even more surprising Shiba Inu. The meme token is often referred to as a competitor to Dogecoin even though competition exists only virtually between both communities.
While watching the addresses reveals what those whales are holding one can only speculate why they have started to support SHIB during the latest sell-off and bought more of it. It seems that big players are looking to invest even though market conditions remain uncertain. One is well-advised to keep in mind that the behavior of those few whales is in no way a guarantee that an investment in Shina Inu or FTT might be profitable in the future. At the end of the day, whales also take losses on a regular basis and not always are they making the best decisions.
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