What are Bitcoin whales and how to detect them?

Bitcoin whales are individuals or organizations with enormous holdings of BTC capable of influencing the market through their trading strategies.

The term “whale” is colloquially used to refer to those who hold a significant amount compared to the “small fish” in the market. The owner of the wallet or group of wallets can be an individual or a group that pools funds for large investments.

Their vast holdings have been accumulated through mining, early investments, and other methods. Whales have the power to manipulate the market by making significant purchases or sales that cause price fluctuations. The abundance of whales and extreme volatility are often linked in the cryptocurrency space.

How much money turns someone into a whale?

A “whale” is considered to be someone who holds a significant amount of Bitcoin, although the threshold is not established. The widely accepted benchmark is 1,000 BTC, cited by analytics firms such as Glassnode when identifying entities with this minimum.

As of March 2024, the distribution is highly concentrated. Only three addresses hold between 100,000 and 1 million BTC, totaling 577,502 BTC. The next 108 largest hold 2,437,765 BTC, with individual holdings between 10,000 and 100,000 BTC. Together, these 111 wealthiest addresses represent approximately 15.34% of the total supply.

Why do they influence the market so much?

Whales exert a significant influence on market dynamics. Their enormous holdings allow them to alter supply and demand, causing price fluctuations with their operations. When they increase their reserves, prices tend to skyrocket, while selling portions can lead to declines.

By holding large amounts, they create scarcity, increasing demand and value. Their transactions can trigger significant price changes, guiding the actions of other traders.

These whales usually operate in public view, with their wallets tracked by the trading community. As a result, their decisions or anticipated movements can cause significant price changes when other traders mimic them.

Some opt for OTC trading to minimize their impact, while others use exchanges to manipulate markets by signaling large purchases or sales.

Strategies Used

Whales are distinguished by their long-term vision and advanced tactics:

Market Manipulation: They occasionally engage in pump-and-dump schemes, buying large amounts to drive up the price and then selling for a profit. They may also start rumors on social media to attract small investors.

Accumulation: They can gradually accumulate Bitcoin through calculated purchases at low prices or during market downturns.

Hodling: They hold Bitcoin for extended periods to protect against inflation or to benefit from long-term value appreciation.

Diversification: Some diversify by investing in other digital assets to spread the risk.

Position hunting: They can sell massively to scare small investors or strategically accumulate to generate positive momentum.

Stop-loss hunting: They deliberately manipulate the price to trigger stop-loss orders of other traders, allowing them to buy at lower prices before a rebound.

How to detect a whale

Whales move funds secretly using innovative methods to hide their identities. However, the transparency of blockchain and alert platforms makes it possible to identify them through on-chain analysis.

To detect them, look for large transactions. Traders can monitor the actions of large holders —a process known as “whale watching”— to gain valuable insights.

Large operations often cause abrupt drops or increases in price. With the price of BTC currently exceeding $114,000, these whales have even more power to influence the market, especially considering that the overall sentiment shows signs of fear according to current indicators.