Trading in financial markets has become highly accessible, and almost anyone can engage in buying and selling various stocks, currencies, and other instruments.
However, this simplified access is usually faced with large market players and multimillion-dollar companies who hold substantial amounts of cryptocurrencies and tokens, called crypto whales.
These giant players use their significant capital to sway the market in their favor and capitalize on huge gains. In fact, there are some benefits to having crypto market whales who trade with millions of dollars. Let’s explore some of these benefits.
Defining Crypto Market Whales
Crypto whales are massive players who occupy a large market share and own millions of dollars worth of virtual coins and tokens. For example, a multinational financial corporation may own 1,000 BTC, which amounts to more than $42 million.
These key market players enjoy a large influence on the market due to their holdings of crypto coins and tokens, enabling them to manipulate the market and take advantage of its dynamics, especially in the crypto market, which runs on speculations and demand levels.
Benefits of Crypto Whales
From the definition of crypto whales, they seem harmful and enjoy unfair market opportunities. However, crypto traders benefit from the existence of these key market players, monitoring their activities and capitalizing on these advantages.
Initiate Bullish/Bearish Runs
Traders track crypto whales and monitor their activities to draw major price predictions and trends. Market whales’ actions drive market sentiment and can start a bullish or bearish movement according to the types of orders they execute.
For example, if traders find a massive selling activity on a crypto wallet, other market participants will follow and sell their holdings of the same coin or token, starting an overall bearish sentiment.
These events are considered critical opportunities for traders to make money and adjust their trading strategies.
Increase Liquidity
Crypto whales trade substantial amounts of coins and tokens, which can majorly affect market liquidity, rendering instruments more available for other market participants.
For example, if 1,000 Ethereum leave one crypto wallet, it will increase the supply of ETH in the market and make it more available for other investors. Thus, buying ETH becomes faster and more seamless, which improves market dynamics and efficiency.
Influence Price Speculations
Some crypto investors create their crypto trading strategy based on whales’ activities, trying to copy their movements and capitalize on possible gaining opportunities.
This trait works perfectly in the crypto market, which is highly speculative, and market participants are highly influenced by public sentiment and opinions.
Conclusion
Large financial institutions and investors who hold thousands of crypto coins and tokens are called crypto whales. These key players can massively influence the market and move in their direction.
There are several benefits to having these large entities in the market, such as driving market trends and influencing speculations that many traders can follow to explore numerous gain opportunities.