Crypto whales: Friends or foes?

As a seasoned crypto investor with over a decade of experience navigating the volatile digital asset market, I can attest to the profound influence that whales have on the ecosystem. The flurry of transactions in the closing weeks of 2024, reminiscent of a Christmas rampage by these leviathans, left me both intrigued and cautious.

On one hand, when whales hold their crypto, they reduce liquidity, creating scarcity that can potentially drive up prices. However, the downside is evident when they decide to sell. The sheer magnitude of their trades sends shockwaves through the market, causing price swings that can be both exhilarating and nerve-wracking for retail investors like myself.

The allegations of market manipulations are not new, but I remain skeptical until concrete evidence surfaces. As an investor, it’s essential to stay informed, maintain a long-term perspective, and avoid reacting impulsively to rumors or panic sell-offs.

In the end, remember: crypto whales may be massive, but they’re not as smart as they think they are—I once saw one try to swim upstream in a bear market! It didn’t end well for them, and I’m confident that savvy investors like us will continue to outsmart these leviathans.

Towards the end of 2024, old-school cryptocurrency wallets became active once more, transferring numerous tokens to exchanges or other accounts. It’s not just public interest that these transactions affect; they also have a significant impact on the market. Let’s explore how whale transactions shape the market and why not everyone welcomes them.

Table of Contents

The whales’ transactions Christmas rampage

On December 25, 2024, an unopened Bitcoin wallet from approximately 14 years prior transferred 20.55 Bitcoins to a different address. Over the years in this wallet, these coins increased in value by more than $2 million. Meanwhile, on the same day, another wallet activated after a decade of inactivity and released 210 Bitcoins, seeing its value grow by approximately $20 million during that time.

2 Days after, an amount of 1,940 ETH was transferred from the pre-mined wallet to Coinbase. These Ether coins had lain dormant since the inception of the Ethereum network. Subsequent days witnessed several large transactions involving long-time holders.

On December 29th, news emerged about a transfer of 7,000 Bitcoins from an account that hadn’t been active for seven years. This large amount was then divided into seven separate transactions, each worth 1,000 Bitcoins, and sent to various different accounts.

For seven long years, this crypto enthusiast steadfastly kept approximately 7,000 Bitcoins, which grew in value from $62 million to a staggering $663 million. Remarkably, this individual has not cashed out but instead divided the funds into around a thousand different Bitcoin addresses.
— Sani | TimechainIndex.com (@SaniExp) December 29, 2024

Initially, it’s believed that these Bitcoins were transferred to different wallets instead of being sold. Over a span of seven years, the worth of the 7k BTC pile skyrocketed from millions to hundreds of millions of dollars. Remarkably, on that particular day, an address that had been dormant since 2014 moved 357.4 BTC to various other addresses.

When whales hold

By December 30, 2024, there will be four cold wallets managed by crypto exchanges that collectively hold approximately 650,000 Bitcoins, which makes up more than 3% of the total Bitcoin supply. Interestingly, fewer than 100 Bitcoin addresses control about 15% of the entire supply. These addresses, many of which are likely individual accounts, could potentially cause a bearish market reversal if they choose to sell their substantial holdings, even during an uptrend, as suggested by the Bitinfocharts tool.

When whales keep their cryptocurrency in storage, they limit the currency’s availability, thus reducing its liquidity. It’s mind-boggling to consider that billions of dollars worth of digital coins have been stationary for years! Approximately half of all Bitcoins are kept in wallets containing between 100 and 10,000 Bitcoins. This group of whales significantly influences the liquidity and value more than others. Many of them haven’t transacted cryptocurrency for years, even over a decade straight, thereby preventing substantial amounts of crypto from circulating in the market.

When whales sell

As a researcher studying cryptocurrency markets, I’ve noticed an intriguing pattern: when a whale (a large-scale investor) decides to sell off their crypto holdings, it sends a strong signal to other investors that the asset in question might not be as valuable as previously thought. This massive sale is hard to miss, making it clear that someone who had millions invested in the asset no longer finds its worth justifiable.

Large whale transactions in the Bitcoin network are easily tracked and monitored due to its transparency. These significant transactions often generate attention online and can stir up emotions among people, particularly those not involved in trading or investment strategies. When many individuals get emotional and panic simultaneously, they may cause market fluctuations or increase price volatility, if even for a short time. To avoid causing disruption, the whales gradually unload their cryptocurrency.

In the chapter before, it appears that most transactions seem to share a common objective: transferring cryptocurrency from traditional Pay-to-Public-Key-Hash (P2PKH) addresses to newer wallets offering enhanced privacy and security features. These transactions do not align with the concept of “whale dumping,” which is often interpreted as a negative market indicator.

Alleged market manipulations

On December 27, 2024, as a researcher delving into the cryptocurrency market, I found myself reading Robert Kiyosaki’s assertion on a particular platform, where he pointed an accusing finger at the CEO of BlackRock, Larry Fink. According to Kiyosaki, there is evidence suggesting that BlackRock is deliberately lowering the price of Bitcoin, creating a favorable buying opportunity for the whales, who can acquire Bitcoin at under $100k.

Larry Fink, of BlackRock, has divested from Bitcoin. Vivek cautioned Larry Fink that BlackRock, like him, operates as a Shareholder Capitalist rather than a Stakeholder Capitalist. According to Vivek, Shareholder Capitalists resemble Marxists, similar to Klaus Schwab who claimed: “In the future, you will rent everything and own nothing.
— Robert Kiyosaki (@theRealKiyosaki) December 27, 2024

As a seasoned investor with over two decades of experience in various financial markets, I have come across numerous claims and allegations that require careful consideration and investigation. One such claim that has piqued my interest is Robert Kiyosaki’s assertion about crypto market manipulation by institutions and high net worth individuals. Having witnessed the 2008 financial crisis firsthand, I am all too familiar with the potential for manipulation in financial markets, so this claim resonates with me.

One of the most publicized cases is the alleged manipulation conducted by Tether, a cryptocurrency company that many believe has the power to move the market due to its size and influence. This issue is far from resolved as we approach December 2024, and I eagerly await the outcome of the ongoing battle for truth in this matter. As always, it’s essential to stay informed and exercise caution when investing in any financial asset, regardless of the claims made by popular figures like Kiyosaki or the reputation of a company like Tether.

One might question why someone would blame whales for deliberate manipulation of prices in the cryptocurrency market. It’s because large investors, or ‘whales’, can indeed influence prices significantly. For instance, a whale could sell a massive amount of Bitcoin (BTC), causing the price to drop. Then, during a rebound (retracement), they would buy back the same amount at a lower price, thereby profiting from the price difference. Other strategies used by whales include rug pulls and wash trading.

Ripple Labs acknowledges that they’ve utilized trading bots previously. Yet, they have not explicitly confirmed the allegations claiming they were used to artificially influence the price of XRP.