What are crypto whales? Understanding crypto whales and their impact on the market

After venturing into the crypto scene, it doesn’t take long to encounter a ‘whale’. But what are they exactly, how'd they get this title? In simple terms, whales are individuals who hold a significant amount of cryptocurrencies. As a result of their whale-sized holdings, these individuals or organizations can have significant influence over the prices of cryptocurrencies as they buy and sell assets. 

When a whale makes a move, it's often a newsworthy event. That’s why it’s helpful for every crypto trader to not only understand what a crypto whale is, but how their activities can impact price action. 

In this article we’ll look closely at what crypto whales are and the impact they have on the market. We’ll also explain who/what some of the biggest crypto whales are and how to track their activities. 

Who are crypto whales?

Crypto whales are the metaphorical big fish in the crypto pond. In the context of wealth and finance, the term “whale” originates from the gambling scene and refers to the big spenders. 

Some crypto whales have amassed their assets simply by being early to acquire large amounts of a token. Others came in later but had the funds to buy up a significant bag of currencies. Meanwhile, some whales are organizations that have acquired their assets through industrial-scale mining. 

How much should an individual or entity hold to be considered a whale? The answer is highly subjective. Some traders agree the individual or entity should hold at least 10% of the entire circulating supply. However, this is impossible with cryptocurrencies like Bitcoin due to its pricing and supply structure. As a result, holdings of over 1,000 BTC generally grant an individual or entity whale status.

One way to look at whales are as those with the power to impact the order book simply by trading on an exchange, such is the size of their typical position. It’s little wonder then why whales and their movements attract plenty of attention.

Impact whales have on the crypto market

How exactly to crypto whales and their sizeable positions influence the market?

Price impact with buying and selling

When a whale sells a cryptocurrency, it's hard to miss. Often, exchanges don't have enough liquidity to facilitate their trades. Meanwhile, the trade is typically completed via an over the counter (OTC) desk. Using an OTC desk brings greater privacy to the buyer or seller and typically allows them to avoid high price slippage. However, if the trade is spotted, other traders often follow with the same position, compounding the impact of the whale’s movement. The trading activity of whales can therefore have a cascading effect and trigger a bull or bear run. 

Influence market sentiment

Because whales are closely monitored, they can easily influence the prevailing market sentiment through their actions. When a whale buys a particular cryptocurrency, it's considered a bullish sentiment towards the asset as other traders typically also look to buy the same coins. This usually applies even if the whale doesn't hold a large amount of that particular cryptocurrency. Conversely, the same applies when a whale sells a coin, as it could prompt others to sell too. 

Liquidity on markets

Whales often accumulate a large amount of cryptocurrency because they’re confident of its long-term prospects. Therefore, the circulating supply on the market is reduced, which could impact the price of the coin. 

Participation in token sales

When a whale participates in an initial coin offering or a token sale, it signals to the rest of the market that they trust in its future. The project's chances of securing funding could greatly improve as the confidence and commitment of whales makes the project more appealing to potential investors. 

Governance and influence over the coin’s future

Whales also hold significant influence on the coin’s future. When a whale wants the project to head in a particular direction, the community often rallies behind them. This can also be a cause of concern however, as powerful whales could influence the community towards making decisions that ultimately might not be positive for the wider community.

However, this hasn't always been the case. For example, when whales wanted Bitcoin to increase its block size and make other changes to the network, they couldn’t get the larger community’s support. This resulted in the whales breaking away with a small portion of the Bitcoin community and forking the network to create Bitcoin Cash. At the time of writing, Bitcoin Cash is worth around 1% of Bitcoin’s total value. Evidently, crypto’s first and largest currency has resisted the pressure of whales, but not all projects can say the same. In the past, anonymous whales have acted selfishly, for example by manipulating with ‌a project’s governance to enrich themselves. 

Top crypto whales

The transparency of blockchain data makes it simple to identify the largest whales in the crypto space today. Read on for an introduction to six of today’s biggest crypto whales. 

1. Satoshi Nakamoto

Satoshi Nakamoto is the anomaly on this list, being a prominent crypto whale whose true identity remains unknown. As the pioneering creator of Bitcoin who paved the way for the industry we see today, it's hard to ignore Nakamoto and their influence. Nakamoto minted around 22,000 early Bitcoin blocks, earning them a whopping 1.1 million BTC. This makes up 5% of Bitcoin’s total supply, and the assets have remained untouched for over a decade after Nakamoto’s online activity stopped suddenly. This makes Nakamoto the biggest crypto whale at the time of writing.

2. Winklevoss twins

The second names on this list are twins Tyler and Cameron Winklevoss. They were early adopters of Bitcoin who bet big on cryptocurrencies. The twins are well-known for having won a $65 million settlement following a legal dispute with Mark Zuckerberg over the origin of the idea for Facebook. They used these funds to buy Bitcoin in 2012 for as low as $10 per BTC. Together, the Winklevoss twins own around 70,000 BTC, making them one of the largest whales. 

3. Michael Saylor

Michael Saylor personally holds around 17,000 BTC, which are valued at over $1 billion at current prices. However, Saylor’s company, MicroStrategy, also holds whale status today. Under his leadership, the American tech company has purchased 214,246 Bitcoins. Unlike other whales on this list, MicroStrategy began purchasing BTC after 2020, when the price of Bitcoin was already relatively high. The company frequently exchanges its cash reserves for Bitcoin, which has a significant positive impact on the crypto market. 

4. Vitalik Buterin

Vitalik Buterin is one of the co-founders of Ethereum and an influential whale. During Ethereum’s crowd sale in 2014, the founders were allocated 16.54% of the initial supply, which totalled 72 million ETH at the time. Buterin received approximately 675,000 ETH, of which he sold significant portions in the following years. However, Buterin still holds around 278,527 ETH, which is worth over $1 billion today. Being one of the most prominent figures in the Ethereum community, Buterin’s actions and opinion can create a significant ripple effect for the industry at large.

5. Tim Draper

Tim Draper is a well-known venture capitalist who was an early Bitcoin adopter. In 2014, Draper purchased 30,000 BTC, which was seized from the infamous Silk Road at a U.S. Marshals Auction. His exact Bitcoin holdings today remain unknown. However, Draper’s 2014 purchase alone is worth $1.8 billion, and many believe he’s continued to purchase more Bitcoin since then. 

6. Chris Larsen

Chris Larsen is the co-founder of Ripple, along ‌with Jed McCaleb. They both received significant amounts of XRP for their contributions to the company. When McCaleb left XRP in 2013, he received 9 billion XRP, which was 9% of the entire supply. However, at the time, he entered into an agreement with Ripple to only sell the tokens at a controlled rate over the proceeding years to avoid impacting the market. In July 2022, Larsen revealed that he had finished selling his share and no longer holds any XRP. 

Chris Larsen, on the other hand, still serves as the executive chairman of Ripple and holds about 2.8 billion XRP, making him the largest whale in the XRP ecosystem. 

How to track crypto whales

One of the most significant aspects ‌of cryptocurrency and its related technology is transparency. This means whale transactions can be tracked in real-time in various ways, allowing the community to understand the sentiment and decisions of crypto’s biggest bag holders.  

Accounts such as @whale_alert on X have labeled certain whale addresses and track them continuously. When a whale makes any transaction, the @whale_alert account shares it with followers.

However, you might want to consider using specialized tools if you’re serious about whale watching. For example, crypto analytics platform Nansen breaks down blockchain data across multiple chains and applications. They’ve also labeled whale addresses for convenience, making it easy to observe their trading activities. 

Similarly, you can also set up wallet alerts. Tools such as the Etherscan block explorer allow users to label addresses and set up alerts whenever an activity is detected. 

How should we interpret whale activity?

In the traditional finance system, all transactions are opaque. It's impossible for us to know exactly which stocks billionaires buy and sell. With cryptocurrencies, we can see the actions of whales the moment they complete a transaction.

There are two major signals when observing whale activity: buying and selling. When a whale interacts with a decentralized application to buy a new asset, they’re bullish on that asset. Similarly, when they sell the same asset, it's considered bearish. 

It can also be interesting to observe how whales interact with exchanges. When cryptocurrencies are moved from an exchange to their wallet, it's bullish as they’re likely not looking to sell those coins in the near future. However, traders expect a major sell-off if they move assets from their wallets to an exchange. Tracking the movement of stablecoins can also serve as a reliable bullish signal, as they’re frequently used to acquire new cryptocurrencies. 

The final word

Crypto whales are influential individuals or entities that hold large amounts of cryptocurrencies. They know their trades hold a lot of weight, and every move they make is being watched. Whales have the power to influence the market in the direction they want, either through their trades or their comments on selected assets.

Like them or not, ‌whales are an essential part of the crypto ecosystem. Their holdings represent a high conviction in the crypto space and its future. Whales also help to maintain strong liquidity in the market, and are often seasoned traders who are in it for the long term. In the future, as the market becomes more established, it's possible there'll be fewer new whales due to the high cost of acquiring large volumes of an asset. As part of careful research into an crypto project, it’s wise to explore the whales that hold large amounts of the project’s token, so you’re fully informed before committing your own time, energy, and funds.