Whales are individuals or entities that own large amounts of cryptocurrencies, such as Bitcoin or Ethereum, and are able to significantly influence the prices of these currencies through their trades.
Here are some of the effects whales may have:
1. Price fluctuations: When whales sell or buy large amounts of cryptocurrencies, it can cause significant price fluctuations. For example, if someone decides to sell a large amount of Bitcoin, the price may drop sharply, and vice versa if they buy large amounts.
2. Sentimental Effects: Sometimes, whale actions can change market sentiment. For example, if a whale starts moving a large amount of currency, other traders may think it means something about the future direction of the market, creating a wave of trades.
3. Market manipulation: In some cases, whales may attempt to manipulate markets by fueling price fluctuations in order to make profits by buying at low prices or selling at high prices.
4. Impact on liquidity: Whales often pump or withdraw huge amounts of money from the market, which can affect liquidity. Sometimes, these operations can make it difficult to execute trades in small markets.
5. Long-term holding of currencies: Some whales do not trade frequently, but rather hold currencies for the long term, which reduces the amount of currency available for trading, and thus may contribute to increased demand and pressure on prices.
If you are investing in cryptocurrencies, it is important to be aware of the influence of whales and be wary of the market volatility caused by their movements.