Steemit Crypto Academy Season 3 Week 1 | Whales - The Driver Of Cryptocurrency Value by @hibbanoor

Hello everyone. I am @hibbanoor. I would like to pay my huge respect to professor @wahyunahrul for sharing this informative lecture. I am very happy to participate in this amazing class. So let's start my homework task without any further delay.

Question 1:- BASED ON THE UNDERSTANDING THAT YOU'VE GAINED FROM THIS CLASS, EXPLAIN WHY WHALES ARE SO FEARED BY SMALL INVESTORS?

We know that crypto market is highly volatile. Sometime the market goes up and price of coin rise, the investors sell their coin at that time to earn profit. Because of low investment, the market goes down and it's downtrend start. Many factors influence the market trend. One of them is Crypt Currency Whale

The term Crypto currency Whale in crypto market is used for that person or organization who have owned a large number of crypto coins and stored them in his wallet. With this much heavy amount, he is able to change the market trend easily. When the crypto currency whale the large amount of coin, many other investors get attracted toward that coin and the market goes high. The price rise and Crypto currency whale then may sell his invested coins to earn profit because he is well aware with the fact that always after bullish period, market bearish period is start. The Crypto currency Whales are powerful enough to change the market trend with their moves.

We can say that Elon Musk is a Crypto Currency Whale. HE has power enough to change the market trends. He is the one who have holded the largest amount of Bitcoin. The bitcoin is the largest currency whose trends effect the trends of other currencies in market. So Elon Musk can uptrend the market by investing more in crypto world. The market will rise and people will attract more toward that currency. When he will sell his invested coins, the market will goes down and price will decrease.

When he tweeted about the bitcoin, many people rush toward the Bitcoin. The bitcoin price was raise in short time.

There are multiple reason why the small investors are feared by the small investors. Some are as below.

1- Great influencer

The crypto market change everytime. Several factors effect the market trends. One of them is Whales too. The whales are powerful because they have owned the large amount of coins. As they have this much amount in their wallet, so they can change the market trend. They can raise the market up by investing more. The price will go up and market will be at its bullish period. But when they withdraw their investment, the market fall and price of the coin goes down. The investors may loss their money because of this downtrend. So the investors are afraid of Whales because Whales can change the market trend at any time.

2- Whale's statements

The Whales are influencer who can influence the market trend. People are aware with the Whale's power. So whenever the Whale give a statement about any coin, that effect highly on that coin's price. Recently The Elon Musk Tweeted about the Dogecoin. People rush to buy the Dogecoin. The Elon Musk' statement influence the market and Dogecoin price raised.

Source

3- Market Trends/Demand and supply

The Whales effect the demand and supply of coin greatly. Whenever the Whale invested his assets in some coin, it result in the great rise in price of that coin. More people invest in same coin by following the Whales to earn profit. When more people invest in the coin, the demand of that coin is increase which increase the price of the coin. As demand goes up, it result in shortage of circulating coin in market.

But when the Whales sale their invested coin at the bullish period to earn profit, the market suddenly fall down because of withdrawer of high share from the whales. The People again sale their coin by following the whale which decrease the coin's price. The demand than is lower than supply. This effect the price of coin badly.

4- Whale's Tricks

The whales always do the trick to earn profit which sometime result in loss of money of many investors. They sell their coins which result in decrease of price. The small investors feared up from market downtrend and sell their holding at low price. The whales invest their coins again and the people who sold their coins at low price now have to buy the coin at high price.

For example, A whale invest and the market price of that coin goes to 5000$. You also invest at that price by following the Whales. But suddenly the Whale sell his coin and market within an hour fell down. Now the Price is 3500$. You get fear from the market downtrend so you sold your coin too at that price but when the Whale again invest his money the price will rise again . Now you will have to buy the coin at high price while you sold your coin at low price. The Whales play such trick to earn money which result in lose of money of many small investors.

Question 2:- WILL WE BE ABLE TO TAKE ADVANTAGES OF THE EXISTENCE OF THE WHALE THAT IS SO FEARED?

No doubt that the Whales influence the market to the great extent. They can change the market trend at any time which scared the small investors. But the Whales are not the dangerous all the time. They can be more beneficial for us if we get to know about their tricks. We we predict the next movements of the Whale, we then can get the high profit. It is hard to predict their moves but their statements and tweets related to the coin can help to predict what the Whale's next step will be.

We can use the phase which are being used by the Whales to predict the next moves of Whales; these are accumulation, uptrend, distribution and downtrend. The small investor should have a look on the Whale's movement and follow them to earn the profit.

1- Accumulation Stage

This is a stage where the Whales are not doing the much investments. They are performing the small transactions. they invest the small amount in any coin. But If small investors see that Whales are buying the coin, they should also buy the coin.

2- Uptrend
The next stage is Uptrend. In this stage the Whales make a big investment which attract the many other small invests attention toward that coin. The whale's big investment result in the bullish period of Market. It mean that the market uptrend is going to start. This stage is best for the investors to buy the coins because the Whale is buying coins. By following the footsteps of Whales, the small investors can also get high profit.

3- Distribution

When you see that the market has reached to the highest point and price is raised to the great extent than sell you holding coins to earn profit. Because this is point When the Whales will sell their coins too. They will earn profit by selling their holding at the high price. So what the small investors should do is to sell their holding too. The small investors should sell their all investment because next the market downtrend is going to start.

4- Downtrend

As the Whales have withdraw their investment, so the demand is now low as compare to supply. Some small investors don't sell their coin at the Distribution phase and keep waiting for more rise in price. When the Whales withdraw their investment, market goes down, The small investors now sell their coins at low price. As because most of the investors withdraw their investment from that coin so the market downtrend start there. The price will feel down. Market bearish period take place. The price get so low at that point.

Question 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)

The above is screen short from Binance showing the top 10 crypto currencies night now. As per homework requirement, i cannot take one among these as example so i am going to use the ETC chart to explain the cycle of Whales.

Accumulation Phase:

The above chart shows that the accumulation phase started around the start of March. The chart shows that the investments and withdraw processes was balanced. The accumulation process start in starting of March and continued till the end of April. There were small ups and down in market between these two months. So many moves were taken by the whales during these two months.

Uptrend Phase:

The graph shows that the Uptrend Phase started almost at the ending of April and goes to it peak in the starting of first week. The phase is just trended in market in just one week. In one week the value raised and the market reached to the peak. This uptrend happened because some Whales invested some big amount in this coin. That's why the market suddently took turn and uptrend was started.

Distribution Phase:

The uptrend phase took place in market because of some Whale. After this uptrend, the price reached to the high point. The market was its uptrend so demand was high. At this point the Whales who invested their money and caused of market uptrend decided to earn profit by selling their invested coins at this point where the Distribution phase started. Firstly they sold some coins just to pretend that market is still going up. The unexperienced investors buy the coins at that time which was biggest mistake of them because the market downtrend started right after that. They might thinking that the market would rise more up but that didn't happened. The distribution phase ended in the second week of May and the Downtrend started.

Downtrend Phase:

The market downtrend started after the second week of May. After tricking the small traders, the Whales earn profit by selling their coins at high price. Because of their move. market downtrend started. The small investors who didn't sell their coins at market uptrend or bough coin thinking that market would go up more faced much of lose. They then has to sell their coins at low price to save themselves from further lose. Because of their this move, the price decrease to the great extent. So again the bearish period started which is best to buy the coins at low price.

Question 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 would be a whale, i would like to invest in the Litecoin. The reasons are as follow.

Increase in Price

The litecoin price is increasing fastly. Although the litecoin is not one among top 10 crypto currencies but investing in Litecoin can be beneficial alot for you. Litecoin price has been increased by tripple in last years. So rise in price shows that this currency would be one among the top soon.

Reliability

The litecoin is reliable in the sense that it is offered by many well known exchange platforms such as coinmarketcap. This is one of the old currency which is open source.

Speed

It was created to sort some problems in Bitcoin. The bitcoin average speed in 7 transaction in one minute. It take nine minutes in verification of the transaction which is performed in bitcoin but i we talk about the LTC, only two and half minutes are require for transaction verification.

Liquidity

The LTC have high liquidity. It's price s 142.54$. It's rank is 13th.

Volatility

The litecoin is volatile. It's market goes up and down by the time. Sometime the price rise and market uptrend start. After each bullish period, the bearish phase take place so market face the downtrend too.

^{Screenshort is taken by the Coinmarketcap.}

Question 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)

By showing the below chart of Litecoin, i will show you how i can earn more profit as a Whale.

Accumulation

Here i would like to invest my money in purchasing the coin at small amount. I would not make a big investment. I would like to buy continuously small amount of coins at this stage.

Uptrend

Then after accumulation phase, i will make a big investment. I will buy a big amount of coin at low price and would save them in my wallet. Some other who were waiting for market change also invest money. This will increase the demand so thus the price too. The market will rise up.

Distribution

At this stage, where some other small investors are still buying at this price, i will sell my coins. Sellng coin at this high price will make a huge profit. I will earn a high profit by selling the coins which i bought at low price in first two phases.

Downtrend

The market starting going down. As many investment has been withdrawn so the price will felling down. This will be time when the small investors who bough the coins at distribution level in high price will have to sell their coin at low price. I will wait until the market price get flatten. Then i again will buy the coins at low price.

Note: below is explanation using the chart in another way.

Accumulation Phase

The above chart shows that the market kept in accumulation phase till the last week of April. This accumulation period was start in second week of March. Small moves were taken by the Whales. The price remained between 175 to 300$. As a whale; i would start buying the Litecoin because the price of the coin is low at this time. I would start buying the coin from the second week of the February and continuously buy till the second last week of April. Now i would have much coins in my wallet and now because of investing this much, market will change its phase from Accumulation to Uptrend.

Uptrend

Now because of investing much in this coin, the price is start rising. Now some experienced investors would follow me(as i am a whale) and buy the coin. This investment will contribute some further in the increment of price. Then a point will come when i stop investing my assets in this coin. Some inexperienced investors would invest at this time. They would buy the coin at this high price thinking that price will rise more. You can see that the price has been reached to the 383$.

Distribution Phase

After the uptrend, i will start selling my invested coins in multiple transactions to earn more profit. As the market has reached to the a high point. Now selling the coins will be more beneficial. Some smart investors would follow the Whales and sell their invested coins too. But some less experienced investors would keep on buying the coins at this high price.

Downtrend

When i would withdraw all my invested assets from this coin, the market price will down. The downtrend will be started as much shares have been withdrawn by me and by some other small but smart investors. So the investors who bought the coins at the Distribution phase would regret and sell their coins at the low price to save from more loss. Now the demand will be less than the supply so price will also decrease. Again the chances will be created for me to buy the coin at low price.

CONCLUSION

The whale has the potential to move the market trend. He use his strategies to earn profit. Some time the small investors lose their money because of moves of Whales. Th Whales play their tricks to uptrend or downtrend the market. The small investors get trapped in their tricks and face lose.

But by understanding their strategies and by following them, even small investors can play smart. They can earn profit too by following the steps of whales. The investors should buy the coins when they see that the Whales ins buying the coin. The investor should sell the coins when they see that the Whale is selling coin. By following them, the small investors can safe their money from being lose.