Crypto Academy/season3/week1 Honework post for professor @wahyunahrul- Topic: Whales-The Driver of Cryptocurrecy Value
Good day steemians, I am overjoyed for taking parr of professor @wahyulahrul's lecture which was welled organised with an easy understanding for students. The methodology is highly recommendable which will surely help students to build up with great knowledge of cryptocurrency. We are giving a homework after the class. Below is the order of the questions and answers.
1)Why whales are so feared by small investors?
Cryptocurrency markets are affected by not merely one factor. Apart from factors such as investing cycles, regulations of government and FUD(Fear uncertainty and doubt), other key factor that affects the market of cryptocurrencies is the existence of the "whales". This whales are mostly feared by small investors because, they owned a very high amount of capital invested in cryptocurrency. When these whales decided to sell their coins, the price of cryptocurrency declines due to the high amount of cryptocurrency sold. At this point, small investors are afraid as they may encounter loss of their small amount invested. The target of investors is when ever the price is high as they needed profit in the amount invested in that cryptocurrency. The activities of this whales turns to put fear on small investors.
2)Will we be capable of taking advantages of the existence of these whales?
When you look at the existence of the whales in a particular cryptocurrency, the demand for that coin increases when you see that whales have invested extremely high amount of capital in it. The gradual increment of that cryptocurrency brings hope to the small investors that the future of the cryptocurrency will be positive, contrary to the absence of whales in a particular cryptocurrency, there will be no rise in price and hence the coin ranking of that cryptocurrency and hence the coin ranking of that cryptocurrency would be declined as the existence of whales in other cryptocurrencies will uptrend. So we should know that the existence of whales have benefit impacts on cryptocurrencies. What we should note as a small investor is to keep watching the whales move, and know that when the slight uptrend meaning whales have bought more coins. But when the the slight declines, it should be a sign for you to know that the whale started selling his cryptocurrency.
3)Find an example of a whales cycle on a cryptocurrency chart and do detailed analysis of the phases in the cryptocurrency.
sourceBelow is the litecoin chart consisting of the accumulation phase, Uptrend, distributive and downtrend phase.
With regarding to the knowledge from professor's class, I will used litecoin to explain the phases.
Accumulation phase
As a whale, the accumulation phase is when the whale will invest or start to investing in litecoin. At this phase, the price of litecoin will be lower.
Uptrend phase
Since everybody is investing for profit, is the same way the whale also needs profit. So he will buy extremely high amount of litecoin which will affect it positively by increasing its price. At this state, we say litecoin is at uptrend phase.
Distribution phase
This is the phase that whale will start selling the litecoin they bought before gradually. They are doing that by targeting selling the litecoin with an aim amount. By then you will see that the demand for litecoin would be higher.
Downtrend phase
Image source 
This phase occurs as a result of small investors realizing that the whale have sold almost all his litecoins, hence hesitated to sell their litecoins just to prevent lose. By this time, the supply will be higher than demand. Hence, the price chart of litecon would be declined by showing a deep downward movement.
4)If you are a whale, what cryptocurrency will you choose to invest or trade?
Cryptocurrencies rises and falls without predictable demand cycle. As a whale, the cryptocurrency which I will like to invest or trade is litecoin.
Why litecoin?
image sourceLitecoin is one of the cryptocurrencies that enter market at earlier. However, it maintains as being part of the largest coin in the market sector. Litecoin is a widely cryptocurrency that is accepted in the world. Vast items such as goods and services can be purchased using litecoin. Looking at the popularity of litecoin spells out that the future of it is really good and therefore needs to be invested or trade in it.
5)How will I then take profit out of that?
To be able to take profit out of litecoin, I will make sure I will purchased huge litecoins at the accumulation phase
so that the price of litecoin will uptrend, by then many investors will have a demand for it
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image sourcewhich will then make the price chart of litecoin moving horizontally, now that the price of litecoin is to the amount I targeted,
then I began selling my litecoins at that high price to take my profit. That is how I took profit after investing in litecoin with less amount per coin at the initial phase.
Conclusion
Whales of cryptocurrencies surely have great impact in the crypto market by affecting it either positively or negatively. This makes small investors feared them, but knowing how the whales take profit in the above paragraph will enable a small investor to obscure from the tea of these whales of cryptocurrencies. My final regards goes to professor @wahyunahrul for enlighten me on the drivers of cryptocurrency.
Thank you for reading.
Cc: @wahyunahrul