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5 tips to keep track of Bitcoin whales

For investors in the cryptocurrency market, tracking the Bitcoin whales is a must. These large investors have the ability to influence the price of digital currencies with simple and repeated movements of funds.

The purpose of the orders of these huge holders is evident and it is about increasing their profits. To do this, they practice market manipulation, something that is prohibited in traditional finance, but not in a sector as young as cryptocurrencies. In any case, to achieve their objectives, the whales make both bearish and bullish movements.

Consequently, these investors make bullish moves to invite thousands of people to place capital in BTC. When they consider that their profits are acceptable, they proceed to withdraw and apply the bearish liquidation movement. Moving in sync with the whales can be very profitable, but guessing their movements can become a tricky business.

Is it possible to follow the trail of Bitcoin whales?

Tracking the Bitcoin whales was previously a bit complex, but now it is not so much. There are tools and even blockchain analysis firms that specialize in this task. And yes, whales follow other whales too. These are 5 tips to keep track of them:

  1. Whales and the price of BTC.
  2. Tracking of transactions on the blockchain.
  3. Deciphering the movements of the Bitcoin whales.
  4. Analysis and meaning of transactions.
  5. Withdraw before the whales open their mouths.

Whales and the price of BTC

The role of whales in the price of Bitcoin and other digital currencies is considerable due to the large amounts that they move. Taking for granted that the price of an asset is determined by supply and demand, the movements made by these large holders are capable of flooding or drying up the market. In other words, with the former they cause the price to fall and with the latter the price rises.

The movements made by these accumulators are intended to absorb the currencies of other investors who moved poorly. A classic example are those who invest large amounts of money when the price of BTC is very high and liquidate it at a loss. All that value that inattentive investors lose goes to the portfolios of the whales.

In this way, the gigantic hoarders at certain times use their capital to buy coins in large quantities and create scarcity. This scarcity causes a constant price rise that attracts thousands of small and medium investors, allowing the price to rise not only driven by the whales, but by the entire market. People who get carried away by greed and don’t collect their earnings on time end up donating them to the whales.

Tracking of transactions on the Blockchain

Being clear about the weight of the whales to determine the price of Bitcoin, the healthiest response of small and medium investors is to protect themselves. The only way to seek protection is by tracking the big hoarders. The ideal scenario for an investor is to anticipate and emulate the operations of the whales. Of course, it is not an easy job and it depends on a high dose of luck.

The Bitcoin blockchain is transparent, which means that anyone can observe the movements. In this sense, monitoring whale transactions is possible, which allows a greater degree of precision when placing capital and withdrawing on time when trading.

The task of keeping track of the big hoarders is extremely complex. Hundreds of transactions are made every minute in the Bitcoin chain and they are of different sizes. Manual monitoring of the network is a task that deserves to be monitored 24 hours a day. Fortunately, people who want to track whales don’t have to do that, as there are fairly accurate analysis tools out there. Among the most popular are Chainalysis and for small investors Whale Alert and many others.

Deciphering the movements of Bitcoin whales

Using these tools saves a lot of work and makes tracking Bitcoin whales easy. These detect transactions when they are of large amounts and ignore those of small amounts. Thus, it is possible to enumerate how many transactions and in which direction the great hoarders or whales made.

CriptoTendencia makes weekly reports on the movements of these heavy investors. To do this, it is based on some portals such as the aforementioned Whale Alert or WhaleBot Alert. Another advantage is that these alerts express whether the operations of the whales are heading towards probable liquidation or towards accumulation. This way, the person can get an idea of ​​the trend with simple math.

Either way, deciphering the movements of the great whales allows investors to determine the possible course of the price. Doing it correctly allows you to have a broad idea about the possible course of the market. On the other hand, one should not ignore the fact that the movement of these large coin holders is not the only element that determines the price of the coin, although it is one of the fundamental ones.

Analysis and meaning of transactions

There are four possible types of Bitcoin whale fund movements. These are: orders from exchanges to unknown wallets, between unknown wallets, from unknown wallets to exchanges and between exchange wallets. Each of these addresses has a different reading when they are the destination of bulk transactions.

Of these four forms of movement, only two have a significant aspect in the price of the cryptocurrency. These are transactions going from exchanges to unknowns (accumulation) and those going in the opposite direction (possible liquidation). The word “possible” is used since not all transactions to exchanges are for the purpose of selling. Despite this, all sales originate from the transfer to the exchanges.

With this in mind, if you take a 7-day period to analyze movements, you should group the number of bitcoins moved into each of these categories. From there you can know what is the approximate short-term trend (bullish or bearish). If most of the coins in that period of time went to exchange portfolios, it means that the price of BTC could go down. On the contrary, if the majority went from exchanges to unknowns, the price would have a chance to go up.

Tracking the Bitcoin Whales
The movement of the Bitcoin whales between January 15 and 18 suggested a relative stagnation of the BTC price. Source: Whale Alert/WhaleBot Alert

The image above shows an analysis of movements from January 15 to 18. In the upper table, all the bitcoins moved on those days are broken down and distributed according to destination. In the chart below, it can be guessed that there is more of a trend towards a possible selloff, albeit a very slight one. That chart predicted relative price stagnation in the immediate term, as indeed it did on those days.

Retire before the whales open their mouths

The importance of being attentive to the movements of the Bitcoin whales is that the investor has a better chance of anticipating. Such is the case that the price of the coin is high and the person begins to notice a growth in the percentage of transactions towards the exchanges. You should immediately take it as a strong bearish signal and take your profits on time.

It is important to keep in mind that this method is not always effective, since whales are unpredictable. These are human beings who, with changing subjective tendencies, decide to make fund movements that are often contrary to expectations.

As already mentioned, the movement of the whales, despite being closely linked to the price, is not the only element that determines the value of Bitcoin. The underappreciated role of retail investors also carries particular weight. The fall in interest from retailers during 2022 led to a drop in trade volume in the sector, which put the fortunes of the whales in jeopardy as there was little shoal to divvy up.

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