CRYPTO ACADEMY: HOMEWORK POST FOR PROFESSOR @wahyunahrul - TOPIC: THE WHALES.
INTRODUCTION
Hello everyone in the steemit family, here is my homework task for profesor @wahyunahrul
WHY THE WHALES ARE FEARED BY SMALL INVESTORS
WILL BE ABLE TO TAKE ADVANTAGES OF THE EXISTENCE OF THE SO FEARED WHALE?
The existence of the whales have brought about the periodic massive increase in the price of various cryptocurrencies and a periodic bearish trend in the price of such cryptocurrencies.
In as much as these whales can drive the prices of cryptocurrencies in such a way that might be very unfavorable for the small investors, we can still take advantage of their existence if we carefully monitor their activities in such a way that we can know what their next action will be.
If a small investors can spot the time in which a whale is accumulating or buying such cryptocurrencies and selling it in a quantity that is moderate, then the small investor can now plan to to sell his cryptocurrencies in a time not too long because the phase that will always follow is the uptrend.
If the small investor had made good plan, then he will now sell his own cryptocurrencies during this uptrend period. This will definitely give him or here an optimum profit from that investment. The small investor can no proceed to buy cryptocurrencies at the time where the downtrend has taken place, this means that he will be buying it for a lesser fee and he stands a chance of selling them for a bigger amount.
Any small investor who makes his/her plan in this manner will stand a better chance of taking advantages from the existence of whales'.
3 - ANALYSIS OF THE WHALES' PHASES USING FIL CRYPTOCURRENCY CHART.
Uptrend or Absorption phase: In the graph above, it can be noted that there is a massive uptrend in the price of Filecoin. This is a clear proof that a whale was in action. With the rapid increase in the price of Filecoin during this short period of time, it can be deducted that the whale was buying a lot of Filecoin within a short period of time and this must have attracted other investors, and the investors might have joined in buying more Filecoin token, leading to the dominant bullish trend seen on the chart.
Distribution Phase: In this phase, the whale is always trying to kick-off the selling of the cryptocurrency so purchased by selling them in small quantities first. In the FIL chart seen above, the whale started selling the Filecoin in small quantities after the sudden uptrend in the price. The distribution Phase is like a strategy used by the whale to sell his/her cryptocurrencies with the targeted price.
Downtrend Phase: This is the phase where the price of the cryptocurrency is witnessing a dominant bearish trend due to the massive sell of the cryptocurrency within a short period of time. In the chart above, it is seen that the price is dropping massively. This is because of the panic selling done by done by other investors after they realized that the whale have sold most of the Filecoin he/she bought.
THE CRYPTOCURRENCY I WILL CHOOSE TO INVEST OR TRADE AS A WHALE;
FILECOIN (FIL)
This is a cryptocurrency that is used to power a network known as Filecoin, this network allows for the storage of information, hosting of information or even retrieval of such I formation if it is lost. The FIL token is the coin used for payment of Services done with this peer-to-peer Decentralized storage network.
I will like to invest in this cryptocurrency as a whale because if you look at the chart of its price above, you will see that the price of the cryptocurrency has been falling on a steady note despite not falling very drastically.
The price currently stands at $56.70 which will give me the chance to buy a very large amount of the cryptocurrency in a short period of time after some time of accumulating it.
My main reason for choosing this particular cryptocurrency is the smooth entry point. The current price of the cryptocurrency will give room for a smooth entry point which will help you achieve a good exit point if you have a good plan and you stick to it.
Secondly, Filecoin is Decentralized, so many people are bound to shift attention to it in the coming future because data is more secured with it due to its peer-to-peer nature. This is in contrast to Centralized cloud storage companies like cloudflare or Amazon web service.
ANALYSIS OF THE FILECOIN CHART AS A WHALE
The price of the FIL token stands at $56.70 and the fluctuations in its price has not been very significant for some time now. As a whale this will be a very good time to enter the investment and start buying and selling the token in small quantities.
The fact that its price is not too high will also give e you the opportunity to become a driving factor in the price of this coin by the time you start buying a large number of it in a short time frame in what is termed "the uptrend".
When am able to buy large amount of the FIL token due to its relatively low price, it will attract other investors to also join me in buying this token and this will cause a massive increase in the price of the coin.
I will then make my profit by selling most of the FIL coins that I bought in the uptrend phase in what will be my distribution Phase. I will fragment the large amount of FIL coins and sell them in small quantities. The time frame of my selling should not be too long so that other investors will not realize it. I will also avoid selling them in large quantities so that I will sell it with the targeted amount.
CONCLUSION
The whales are people who go into cryptocurrency investments just like all other people can do, but what makes them very different is the size of their investments. Since the size of their investment is so big, then whatever they do in the market will always have an effect on other small investors.
So as a small investor, you need to have the ability to spot that moment in which a whale has entered his investment and you now need to analyze what could happen thereafter. If you can make a good analysis and a good plan alongside other wide-range activities, then you can avoid falling a victim of the effects of their actions.
Note: All screenshots were taken by me.