Crypto Academy/ Season 3 / Week 1 / Homework Post for Professor (@wahyunahrul) || Whales, the drivers of Cryptocurrency value

(1) Based on the understanding that you've gained from this class, explain why whales are so feared by small investors?

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Whales in the world Cryptocurrency refer to those persons or group of persons who hold or own huge amounts of a particular cryptocoin. This amount of coin which they posses then makes them powerful enough to be able to manipulate the value of the cryptocoin which they hold in abundance.

Whales could alter the market value of their desired coin in two ways

• Through the sell order (sell wall): when whales Inputs in the market, massive amount of sell order, there tends to be volatility in the market and this will bring about a decline in the value of the cryptocoin and this is exactly there aim. What they do next is to acquire more of that coin given that they have already created enough panic in the market and other small investors will readily want to sell off even at a loss price.

• Through the buy order: whales can also influence and manipulate the coin which they hold but this time to cause a hike in the price. They would usually input a buy order that with a high price and this buy order will outwit the available supply of that coin thereby making my the demand high and consequently the price to go high. At this time, they will then sell off there coins with the opportunity.

With these being said, one can see that as at when the whales want to strike, the small investors are always at their mercy hence the fear of whales by small investors.

(2) Will we be able to take advantages of the existence of the whale that is so feared?

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Can we take advantage of the manipulating actions of the Whales? The answer is Yes.

As a small investor, if I make time to observe the move of the whales and the currency which they influence, then I could also utilize the knowledge in buying, selling and even trading my coin according to the market manipulation style of the whales.

Small investors would generally take advantage of the hike in price manipulation of whales to buy that particular coin with hopes that the coin is going to appreciate more in value. Just as that particular coin starts to increase in value, the whales will withdraw their buy order and at that time, most small investors who have already bought that coin will then experience a loss in the value of the coin in which they have just acquired. This strategy usually work upon investors who have FOMO.

In the sell wall manipulation, the whales would usually force people psychologically to sell off their coin so that they may in turn acquire more coins in the midst of the panic which they have created.

All these strategies of the whales can be eluded by small investors but first, these small investors need to get a good knowledge of the crypto world to be able to spot the activities of whales

Small investors need to know the value of thorough research in Cryptocurrency before investing so that they don't fall victim of the whales activity.

(3) Find an example of a whale's cycle on a cryptocurrency chart, and do a detailed analysis of the phases in the cryptocurrency chart (don't take the cryptocurrencies that are ranked in the top 10 as examples). (Screenshot Required)

List of first ten cryptocoins according to coinmarketcap

Below are some of the waves used by the whales to manipulate the crypto market.

The screenshot above is a graph of the CRV Coin over 6 hours timeframe. Below is an explanation of the image above.

Accumulation Phase

This is the first phase where the Whales will silently but continuously buy or gather a Cryptocurrency with a volume that would not disturb or affect the price of the coin. To achieve this, enough money is pulled into this stage by the whales but gradually so as not to raise concerns toward the coin when the time is not yet due.

Absorption Phase (Uptrend)

After the accumulation phase is complete, the crypto whales will dash into the next phase, known as the absorption phase. In this phase, the whales start to massively buy a Cryptocurrency within a short time frame.
This action will in turn prompt other investors to buy that coin with hopes that the coins value will appreciate the more. At some point in this stage, some investors will start selling there coins in little ratios and so the price movement doesn't appreciate much any more. Rather, it maintains the new high price and this is where the next stage sets in.

Distribution Phase

In this phase, the whales will then start to sell off the coins which they had acquired earlier on in the first phase. They will do this so that it is not noticed by everyone. At this stage, some investors will still want to buy the coin with hopes that it will increase in value.

Downtrend phase

After the whales must have sold almost all their coins, then it will tell on the market that there has not been more demand for the coin and so there will be a gradual drop in the price of the coin. When the other small investors must have discovered that the coin which they had bought is getting devalued, they will begin to massively sell off there coins so as not to lose out totally. At this point, since there are no demand for the coin, then the price will fall very much.

(4) If you are a “Whale”, what cryptocurrency would you choose to invest or trade (except those that are in the top 10), explain why you chose that cryptocurrency?

If I be a crypto Whale, I will go for the tokens of Curve DAO (CRV)

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Below are my Reasons

Low Market Price of CRV

The price of CRV is at $1.63 per CRV. Although CRV is not a penny coin, it is not up to $2 either. This relatively low price of CRV will enable me as a whale to be able to set a buy order that will bring about a hike in the price of CRV. This hike will in turn cause other people to want to buy the coin as well and after a few moment of price hike, I will then withdraw my buy order and by then, I must have made my gain from the coin.
But this price factor will work in accordance with the circulating supply and maximum supply

CRV Circulating supply & Max Supply

The circulating supply of CRV is about 378,460,060 CRV and the Maximum supply is about 3,303,030,299 CRV.
This implies that the percentage of the circulating supply is about 10.94%. With this, one can easily notice that the time of CRV to reach it's maximum supply is still long and so an average small investor will want to invest in the coin.

Also, the worth of total circulating supply of CRV is $616,889,898. This is very low as at when compared to some Altcoins and so this will enable me as a crypto Whale to be able to make a buy or sell order that will affect the price value of CRV.

(5) Do a kind of analysis as a whale with the phases that I explained earlier on the chart of your chosen cryptocurrency, show where you will start buying the cryptocurrency, and explain how you will take profit. (Screenshot Required)

As a crypto Whale that wants to invest and manipulate CRV coin, I will make my strategy in the manner shown below.

The accumulation phase

In this stage, I will acquire the CRV coin in a relatively high volume that will not alter the price immediately. I could achieve this by swapping another coin for CRV or even depositing fiat to buy CRV.

The Uptrend phase

In this phase, I can now make the public aware of my dealings. The aim is to attract the eyes of other investors while I also place more buy orders as can be seen in the picture above. Surely, the coin is going to experience an increase in price and that is my goal.

Distribution

In this stage, I will then start to gradually sell off my coins as my target price has been reached.

Downtrend

This is the point where all other investors discover what I, a whale have done and so to avoid total loss, they begin to sell off their positions. This combined sell order reaction will bring about a decline in the price of the CRV coin hence, my whale circle has been completed.

(6) Conclusion

Crypto whales sometimes drive the market without small investors knowing it.
This is why it is good to make good research on a coin before attempting to invest into it. This way, you could understand the trend of the coins chart and be able to know if the coin is driven by the activities of whales.

Whales can make you lose all you have just invested and at same time, they can also make you to earn double of your returns or more.
The outcome you get depends on the research and thorough study of the coin which you wish to invest.

(All screenshots were taken from coinmarketcap)

Regards to professor @wahyunahrul