The influence of whales on the cryptocurrency market: how to resist them
The cryptocurrency market is known for its volatility, and one of the key factors causing it is the actions of so-called "whales". In the context of cryptocurrencies, whales are big players who own significant amounts of cryptocurrencies and can influence the market through their actions. Let's take a look at how they affect the market and what retail traders can do to protect themselves.
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Who are whales and their impact on the market?
1. Price manipulation
Whales can influence prices through strategies such as:
Dumping: Selling large volumes of an asset, which lowers its price.
Pumping: Mass buying of an asset to cause the price to rise.
2. Liquidation of positions of other traders
Large whale trades can cause prices to move wildly, leading to the liquidation of high leveraged traders' positions.
3. False market signals
Whales sometimes place large orders that are then withdrawn to create the illusion of high supply or demand.
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How to resist the influence of whales?
1. Study market trends
Analysis of large trades can be done through on-chain transaction data and order monitoring tools. Platforms like Glassnode or Whale Alert help track whale activity.
2. Don't panic
Whales often take advantage of the market's emotional response. If you see a sharp drop or rise, wait for it to stabilize before making decisions.
3. Diversify your portfolio
Investing in different assets reduces the risk of losses due to manipulation of one asset.
4. Avoid high shoulder
Using excessive leverage increases the likelihood of liquidation in the event of sudden price movements.
5. Place realistic stop bets
Stops that are too tight can be triggered by small fluctuations. Choose levels that take into account the volatility of the asset.
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An example of whale action and lessons for traders
Situation: In 2021, a large Bitcoin owner transferred a significant amount to the exchange, which caused panic and a short-term drop in price.
Lesson: Take your time with decisions, check the context (for example, is the asset really being sold or is it just a move between wallets).
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Visnovok
Whales will always be a part of the cryptocurrency market, but their impact can be minimized by understanding their strategies and trading rationally. The main thing is to learn to think strategically and avoid emotional decisions.
Stay informed and always analyze the market before trading.
