Academy Season 3 Week 1 | Whales - The Driver Of Cryptocurrency Value by @doctor23

Why Whales are feared by small investors.

Yes, it is true that whales are quite feared in the crypto market. Solely because we do not know when actually they are to make a move which I will be explaining in details.
The whales are known to posses a high amount of crypto assets, or when ever they are purchasing, they purchase in very huge quantity that turn to move the market in a significant way, or increase it volatility.

In addition to the purchases and sales, News events from whales such as tweets turn to move the market in a significant as well. For example is the recent tweet from Elon Musk who tweeted that on the environmental concerns coupled with the mining of bitcoin, this actually caused a significant drop in the value of Bitcoin.
Examples of whales include;

• Michael Saylor CEO of Microstrategy.
• Matthew Roszak founder of Blochain technology.

In this same light, I will explain now in detail why whales are that feared by small investors; When a Whale purchases a significant of crypto in the market, the market turn to be Bullish in that short period. This is actually based on the demand and supply theory, as they have been a high demand. Now in the case when they want to sell their crypto assets, they turn to be a lot of supply in the market than the demand, in this regards the market will show a bearish trend decreasing the value of that cryptocurrency. This is actually what small investors fear; most especially because they do not know when this senario will come.

How to take advantage of whales as small investors.

Taking advantage of the whales is a dream come true scenario. When a whales buys crypto, or when a whale enter a position to say, the demand for that for that particular crypto will actually will increase. Investors are to take advantage of this period to join the bullish trend and make some profit.

Now the problem here is small investors might not know when to exist the trade which is suppose to be at that the distribution phase. An example here is the Omni coin; the omni coin rised up to 400% in a single day due to high purchase by a whale. In less than few hours later, the market fell back by 350%. in this light, a good entry is particularly at the entry time of whales as whales.

The Whales cycle

The Whale Cycle Basically consist of the following cycles;

• The Accumulation Phase
• Uptrend
• The Distribution Phase
• Downtrend

1. Accumulation Phase

This phase shows the period in which whales are still preparing to buy a buy a particular crypto asset. It shows a lot of indecision in the market; as the prices of the crypto contracts and follows a straight trend. The movement is neither dormant in a buy or sell.

1. Absorption Phase or Uptrend

The uptrend comes soon after the accumulation. At this point whales have finally made a decision to purchase that particular cryptocurrency. This phase indicates a high demand. Whales actually buy the crypto in large quantity.
Doing so, the whales also attracts small investors, who will follow the uptrend.

1. Distribution Phase

This is actually the third phase, and i can term it the most critical stage, because this is where indecision making comes in for small investors. At this stage, whales will begin taking their profits and closing positions. This phase shows a significant stright trend, which is neither bullish nor bearish.

1. Downtrend phase

This is actually the last phase in the whales cycle. This phase shows a very significant drop in the prices of that crypto asset. At this stage, we say supply has exceeded demand.
When small investors realise whales have sold out their crypto assets, they begin selling out as well causing a bearish trend.

Cryptocurrency I will invest in if I was a whale.

If I was a whale, the crytocurrency I will invest in at this moment will be the steem crypto currency. It is actually ranked 213, from the 280 of last in market capitalisation. Also, with the previous fall of the steem crypto currency from over $1 to less than $0.2, I think as small investors are looking keen to invest in the steem crypto, it is a perfect time as a whale to make a rapid move on the crypto; purposely making it bearish back to the price of $1 per steem.

My analysis as a whale.

I will be analysing the Litecoin, it is listed on the 14th position on coingecko.
The screenshot below shoes the first 10 crypto currencies on coingecko.

The Accumulation Phase: Here we can litecoin prices with a lot of indecision, neither rising nor falling, as whales are getting ready to invest in ltc.

Uptrend: At this stage, whales purchase litecoin with a signifant amount, causing a bearish trend a lot of demand in litecoin by small investors.

Distribution: whales begin selling their litecoin assets.

Downtrend: bullish trend, as small investors begin selling their litecoin as well. More supply exceeding demand.

Re-accumulation...

Conclusion

In a nutshell, i will be saying finding the perfect time to invest in a particular cryptocurrency should be the key point for us small investors, meaning that, this will be achieved by carrying out proper research mostly based on fundamental analysis, to find out when a whale is about to invest in particular crypto asset and follow thd trend as well

CC: @wahyunahrul