Whales hold massive amounts of cryptocurrency. Unfathomable amounts to shrimps like us. They can be a person, an institution, or a group of people.
Some say that number is around 1000 bitcoins but I don’t know what a reasonable number would actually be.
There are plenty of ways to manipulate markets. This is how the whales do it.
1. Sell Walls
Whales place large Sell Orders or multiple sell orders at a specific price. This creates downward sell pressure, as no orders above this price are being filled.
2. Buy Walls
This has the opposite effect as a Sell Wall. A Whale can place a massive a massive Buy Order at a specific price. This size of these Buy Orders are large enough to force the price upwards as long as these orders are getting filled. This can create a demand for the crypto in question and cause people to increase the price they they’re filling to pay (FOMO)
3. Dumping
If a single whale decides to sell a large portion of their holdings, it can create a massive sell off, followed by panic and fear which drive the price even lower. The prices often recover quickly, and anyone who gets their buy orders filled at those prices usually does quite well. These are often called Flash Crashes.
4. Stop Loss Hunting
Whales know where traders are placing their stop losses and they will hunt you down. Example: If the break out target of a pattern is at $15.00 traders will often place stop losses at $13.00 or at the start of the break out in case it fails. The whales know this and know that lots of traders are doing the same thing. They will drive the price down to $13.00 and create a chain reaction of triggered stop loss orders that become market orders. This brings the price of the asset even lower. This is where the whales come in and buy your coins at a discount.
5. OTC trades
Over The Counter trades allow whales to buy and sell large of mounts of crypto privately and with minimal slippage. These trades don’t show up on the order books and have less of an effect on the price.
Markets can be manipulated by spreading fear. We see this all the time in the R/CryptoCurrency subreddit. If you can get enough people to believe a certain event or chain of events is going to happen, it can cause massive sell offs, and even trigger bear markets.
Hopefully you have learned something from this post. If you have anything to add, or I missed something important.
Please let me know in the comments :)
