How Bitcoin Whales Make Markets Rumble and Move Prices


Deriving their names from the size of the massive mammals that swim through Earth’s oceans, cryptocurrency whales refer to individuals or organizations that hold large amounts of cryptocurrency.

In the case of Bitcoin (BTC), someone can be considered a whale if they own more than 1000 BTC and have less than 2500 of them. Because Bitcoin addresses are pseudonymous, it is often difficult to ascertain who owns the wallet.

While many associate the term “whale” with some lucky early adopters of Bitcoin, not all whales are truly the same. There are several different categories:

Exchanges: Since the mass adoption of cryptocurrencies, crypto exchanges have become some of the largest whale wallets as they hold large amounts of crypto in their order books.

Institutions and Corporations: Under the leadership of CEO Michael Saylor, software firm MicroStrategy owns over 130,000 BTC. Other publicly traded companies such as Square and Tesla have also purchased large holdings of Bitcoin. Countries like El Salvador have also purchased a significant amount of Bitcoin to add to their cash reserves. There are custodians like Greyscale that hold bitcoins on behalf of large investors.

Individuals: Many whales bought bitcoin early when its price was much lower than today. Gemini crypto exchange founders Cameron and Tyler Winklevoss invested $11 million in Bitcoin in 2013 at $141 per coin, buying over 78,000 BTC. American venture capitalist Tim Draper bought 29,656 BTC at a price of $632 per piece at a United States Marshal’s Service auction. Digital Currency Group founder and CEO Barry Silbert attended the same auction and acquired 48,000 BTC.

Packed BTC: Currently, over 236,000 BTC are wrapped in Wrapped Bitcoin (wBTC) ERC-20 tokens. These wBTC are mostly held with custodians who maintain the 1:1 relationship with Bitcoin.

Satoshi Nakamoto: The mysterious and unknown creator of Bitcoin deserves a separate category. It is estimated that Satoshi may have over 1 million BTC. Although there is not a single wallet that has 1 million BTC, using on-chain data shows that of the first 1.8 million or so BTC that were first created, 63% were never spent, making Satoshi a multi-billionaire.

Centralization in a decentralized world

Critics of the crypto ecosystem say that whales make this space centralized, perhaps even more centralized than traditional financial markets. A Bloomberg report claims that 2% of accounts control over 95% of Bitcoin. Estimates suggest that the world’s richest 1% control 50% of global wealth, meaning that wealth inequality in Bitcoin is more widespread than in traditional financial systems: an allegation that undermines the idea that Bitcoin can potentially disrupt centralized hegemonies.

The obligation of centralization in the Bitcoin ecosystem has dire consequences that can potentially make the crypto market easily manipulated.

However, Glassnode’s insights show that these numbers appear to be exaggerated and do not take into account the nature of the addresses. There may be some degree of centralization, but that may be a function of free markets. Especially when there are no market regulations and some whales understand and trust Bitcoin more than the average retail investor, this centralization is bound to happen.

“The Wall for Sale”

Sometimes a whale places a huge order to sell a huge chunk of their bitcoins. They keep the price lower than other sell orders. This causes volatility, leading to a general decrease in real-time Bitcoin prices. This is followed by a chain reaction where people panic and start selling their bitcoins at a lower price.

The price of BTC will stabilize only when the whale withdraws their large sell orders. So now the price is where the whales want it to be so they can accumulate more coins at their desired price point. The following tactic is known as the “sales wall.”

The opposite of this tactic is known as the fear of missing out tactic, or FOMO. This is when the whales put massive buying pressure on the market at higher prices than current demand, forcing bidders to increase their bid price so that they sell orders and fill their buy orders. However, this tactic requires significant amounts of capital that are not necessary to remove a sales wall.

Watching the selling and buying patterns of whales can sometimes be a good indicator of price movement. There are websites like Whalemap that are dedicated to tracking every whale indicator and Twitter handles like Whale Alert, which is a guide for Twitter users around the world to stay informed of whale movements.

When the whale bursts

Sixty-four of the top 100 addresses have yet to withdraw or transfer any bitcoins, indicating that the biggest whales may be the biggest hodlers in the ecosystem, supposedly due to the profitability of their investment.

Evidence that whales remain profitable is clear from the above chart. When calculated as a 30-day moving average, over the past decade, whales have remained profitable over 70% of the time. In many ways, their confidence in Bitcoin is what strengthens the price action. Being profitable (in this case monthly) for the majority of their investment period helps reinforce their belief in the hodl strategy.

Even in 2022, one of the most bearish years in Bitcoin history, exchange balances have declined, indicating that most HODLers are hoarding their Bitcoins. Most savvy crypto investors refrain from holding their long-term Bitcoin investments in exchanges using cold wallets.

Kabir Seth, the founder of Speedbox and a long-term bitcoin investor, told Cointelegraph:

“Most whales have seen multiple Bitcoin market cycles to have the patience to wait for the next one. Now in the Bitcoin ecosystem, the whales’ faith is reinforced by the macroeconomics of inflation and more recently by the correlation with the stock markets. Whale wallet chain data shows that most of them are hodlers. Those that came in during this market cycle did not realize realized profits to sell. There is no reason to believe that the whales will abandon the Bitcoin ship, especially when there is economic fear of an impending recession.”

Kabir’s trend on macroeconomics and stock market correlation can be seen in the chart below, which shows that since the last market cycle in early 2018, Bitcoin has closely followed traditional investment assets.

The good lining in this trend is that Bitcoin has entered the mainstream in terms of consumer sentiment, changing its reputation as a fringe asset. On the other hand, a 0.6 Pearson correlation with the S&P 500 is by no means a hedge against traditional markets. Other experts within the crypto ecosystem also seem to be dismayed by this trend.

The broader macro economy may be an important reason for the correlation between stocks and Bitcoin. The past few years have seen inflows of funds into the stock markets that were unparalleled in history. There are theories that in an extended bear market or in terms of financial catastrophes, the correlation with the stock market may break down.

What does it mean when a whale sells?

However, a simple look at the on-chain data for the last three months shows that the number of whale wallets has decreased by almost 10%. However, there has been a corresponding increase in wallets holding from 1 BTC to 1000 BTC. The whales appear to be de-risking their positions and larger retail investors are piling in in turn, providing liquidity to the whales. The historical trend shows that when this happens, there will be a short-term decline in Bitcoin prices, which will eventually cause the whales to aggressively accumulate more.

When asked about the very recent sale of whales, Seth said:

“It’s almost inevitable that there will be a period of a few weeks when the Whales will start to sell. This is the mechanics of market movements. Right now, the broader market sentiment for Bitcoin is that the bottom is there. There are sentiment analysis tools to back this up. Some whales may be playing against this trend, in turn creating more panic in the market. If there is a big sell-off now, Bitcoin prices may fall as retail support is broken. Then only the whales will have the liquidity to accumulate.”

What the market can learn from Kabir and the whales is that the future of Bitcoin is where the bet needs to be. Locally, sentiment can be manipulated and prices can be influenced. In the long run, however, when the dust settles, hodlers will prevail.