The term crypto whale is one that every crypto trader who had invested in Bitcoin would be familiar with today. This is because the major price movements in the market whether upward or downward are caused by the activities of these crypto whales. Many crypto traders who have lost some funds in the past; due to the pump-and-dump activities of these Whales now take time to examine every crypto project to ensure that there are no whales on it before proceeding to invest in them.
Often, investing in crypto projects with many Whales has been considered a very risky investment when it comes to cryptocurrency trading. This work will therefore help you understand the meaning of crypto Whales and why it is very risky to invest in any crypto project with a lot of whales in it.
What are Crypto Whales?
What comes to your mind when you hear about Crypto Whales? Some traders often think about the large water giant fish known by this name whenever the word is mentioned. Well, if you are among such traders who often think that way when the word is mentioned, then you got nothing to worry about as the idea you have about this giant water fish known as Whale will all the more help you understand the meaning of crypto Whale and why crypto traders invented this word to describe the activities of a particular class of crypto traders called crypto Whales using the crypto jargons.
To further brighten your previous knowledge of what you know about the sea Whale before we proceed to define the crypto Whale, we need to mention here this interesting fact about the sea Whale which is that: they can survive for months without eating and can feed on other sea creatures once they are hungry. Also, their bodies are so large that they can sink a large boat. With these points in mind, we can proceed to define a crypto Whale below.
A crypto Whale refers to wealthy crypto traders with large holdings in a particular crypto project. Often, these whales could hold as high as five to ten percent of a particular cryptocurrency. This could even be greater in cases of newly launched crypto projects still at the pre-launch stage when an individual could be found to hold as high as 50% of the coin in their wallets. This is very unhealthy for such projects as such individuals will single-handedly influence the price of that cryptocurrency when they sell off their holdings.
How to identify a crypto project with Whales in them
Before investing in any crypto project, it is always necessary for the investor to do proper research and ensure that there are no whales on the project. This is because such Crypto projects with large whales in them are usually subject to pump-and-dump in the market.
To identify a crypto project with large whales in them, the trader needs to study the transaction hash ID using blockchain explorer for the particular cryptocurrency he wishes to invest in. This will display the project and the different wallet addresses holding the coin.
Why should you avoid a crypto project with a lot of whales in it?
Crypto Whales are known to be large holders of a particular cryptocurrency. The amount of coin held by these Whales is so large that it affects the price of the coin negatively each time they decide to sell. One important reason why investors tried to avoid a crypto project with lots of Whales in it is that such projects are subject to pump-and-dump.
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