Crypto Academy / Season 3 / Week 1- Homework Post for Professor @wahyunahrul - Topic: Whales - The Driver Of Cryptocurrency Value by @lukman1

Hello Professor @wahyunahrul, it's really an honor and a joy for me to be able to attend this your lecture. First of all, I will like to use this medium to say a big congratulations to you on your appointment as a Crypto Academy professor. This class was very interesting and I really enjoyed your lecture about whales and the influence they have on the market. Here's my homework post and I hope you will enjoy it too.

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

WHY WHALES ARE FEARED BY SMALL INVESTORS

Source

Whales generally refers to people that have very strong control or a high level of significant influence over the Crypto market. These people invest and owns a large or greater quantity of assets in the market and at the same time, possessing a lot of capital to buy more of that asset.

In basic economics, each market structure is control by the principle of demand and supply. In this our case regarding whales it's not an exemption. Prices of assets rises and falls with respect to their demand and supply of in the market. Whales are able have significant influence on this assets, that's causing them to increase and decrease because of the quantity of assets they hold and the quantity they can buy.

Because whales are given the power to decide on the prices of assets in the market, small investors are not always at ease pushing more of their assets into the market. This means that because some group of people have high influence and control the prices of assets, small investors always find it a problem in investing more.
Due to whales high influence on the market, small investors always fear whales when it comes to investing. This is because of their decision to buy or sell, more importantly the sell can reduce the price value of the assets they hold. And they being people who take advantage of the control they have, one can't really tell when they are going to make a move.

1. Will we be able to take advantages of the existence of the whale that is so feared?

HOW TO TAKE ADVANTAGE OF WHALES
The market is structured in such a way that a significant or high increase in prices of assets leads to a corresponding great increase in their demand. This same phenomenon or principle applies when we are talking about the supply of assets by whales. This great increase in demand and supply is possible attainable by whales. Because of this reason, prices of assets on the market is never stable. They changes each second. This is one of the main reason why the crypto market is highly volatile.

When it comes to whales, I have a strong and firm believe that one can take advantage of their existence. To be able to accomplish this one, it's advisable for every investor both incoming and existing, to really do a thorough study of the market of the asset you are to invest in. Make enough investigations and analysis on the asset to be able to find the right entry and exit positions.

It's highly advisable and commendable for every investor to know their risk tolerance and they should also try as much as possible not to do FOMO too. FOMO would make you take wrong decisions and miss the right entry positions. A big advantage of knowing your risk tolerance is that, you avoid investing amounts that would cause you panic and fear into making quick and wrong decisions with regards to your investment.

With the elaboration given, you won't fear whales as investor but rather like them if you learn to ride with them. The relationship that exists between whales and investors is a symbiotic relationship simply meaning that both whales and investors benefit from each other. Just like the way some other creatures ride and feed from real whales in the ocean, we as investors should also learn to ride with them and not fear them.

1. 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)

TOP 10 COINS ON BINANCE

Binance

WHALES PHASES IN CHART

Whales are very smart in such a way that they make very good use of the significant increase or decrease in prices of assets with their actions and the psychology of other traders to make profits.
In the graph below, I have indicated the various phases whales use.

DOGE/BTC 4 hour chart | Coinmarketcap Charts (TradingView)

The behavior of the whales resulted at the four identifiable phases stated 1, 2, 3 and 4 in the chart above.

1 ACCUMULATION PERIOD

At the period, the chart moves horizontally or side-ways showing that the price is staggering at very low ranges. This is due to the fact that the whale keep buying and selling of the coin in bit. But they are buying enough of coin(Steem) at a cheaper price to buy in a larger quantities after many other investors have been attracted too to sell their assets.

2 UPTREND PERIOD

In this stage, the price value of the asset is at an increasing rate. There is a climbing effect too because the whales buys their coins in large volumes or quantities at once, resulting in a sharp increase in the price of the coins. But this sharp practice of the whales here lure and deceive other investors into buying the coins that the whale already have in large stocks at their disposal. Due to these buying sprees, bullish period set in where there's more buyers than sellers.

3 DISTRIBUTION PERIOD

This is the third phases in the Whale's cycles of market behavior. Here, at a set price target, the whales started to sell their large volume of coins to make a high amount of profits. Other investors might not know but busy buying at a set price which makes the chart graph to be horizontally because the set price of the coins varies insignificantly.

4 DOWNTREND PERIOD

This is the downward movements of the chart graph. It is as a result of the panic psychology created when other investors got to know that the whales have already exhausted selling their assets (coins) and started to sell their own. Many sellers and many coins will lead to the fall in the price and the bearish situation will occur just like what the market experienced about two months ago till date.

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.

THE CRYPTO CURRENCY I WILL INVEST IN AS A WHALE

Before one decide to invest in a cryptocurrency, you first have to make fundamental and basic analysis of that particular asset. After making your thorough analysis through research, you then make sure to find the right point to take positions with some technical analysis depending on how long you choose to hold the coin.

Through my experience on the market and looking at the trends of the various coins except the top 10 coins, I would choose to invest in Tron (TRX) as a whale.

Tron (TRX)
Tron is currently at a spot of 25 according to the rankings on coinmarket cap.

coinmarket cap.com

TRON is an acronym that stands for "The Real-time Operating system Nucleus," an expression that's a little difficult to understand unless you have a background in computer science.
Tron is a blockchain network founded in 2017. During that time many cryptocurrencies that emerged the market have failed to put up good performance unlike Tron. It's still in the pipeline of reaching an average price of 1 USD, which I have a strong fate that it would be possible very soon.

Investing in Tron as a whale, I have weighed the advantages against its disadvantages in the market at the same time comparing them to other coins. As a whale, the reason I would invest in Tron is that it functions just like the top coin(Ethereum) and is cheaper. Transactions in Tron is less costly and as well very efficient and reliable. Its developer team is very strong and serious as well. With this advantages relating to Tron, many people(investors) would like to switch to using Tron because of the benefits they can derive.

Another reason is that Tron's value currently is very good for investment. It's value is less that a dollar which means I can buy a lot of TRX tokens with little money and earn lots of interests when it rises.

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)

TRON CHART ANALYSIS

I'm going to do a TRX/USDT pair chart analysis as a whale and indicate my buy and sell positions as a Whale with the chart below.

TRX/USDT Daily Chart | Coinmarketcap Charts (TradingView)

As a whale who mean business and is ready to harvest every opportunity in order to make greater profits, I have to set some limits and positions for myself. This can be achieve by using the various stages or phases of how whales behave on the market. At both the accumulation and uptrend phase, I make my purchase(buy) when the prices of TRX rises above the limit I set for myself. As a whale, the only time I make more purchase of the asset is when the price of the asset falls. I then make preparations to take over or control the market when price of the asset rises.

As I already stated, to control the market I buy a large amount of the asset when prices falls and then wait for other traders to follow same. One important thing to understand is, the more assets I buy have a great influence on the increment of the price. This means that, I buy again and get other traders to believe prices are going to rise massively.

So I will make sure that I will set a target of the asset I will be buying. Once this point is reached, I can choose to sell my asset if I'm okay with the profit I've earned. In fact, selling this time as a whale you will be making a lot of profits but I will choose to hold on my assets for a bit longer.

Next I buy more when price begins to fall slightly which would make the small investors to sell because their set limit would have been broken. This would make them want to enter the trade again and as such price would increase again massively.

Now when price reaches the distribution period, I sell all my holdings and make a lot of profit. I repeat this process after the downtrend phase have ended and keep on making lots of profit from my influence.

CONCLUSION

In conclusion, I have got to realized that the plan whales uses in making more profits for themselves is a self sustaining plan. Whales will always continue to have a greater influence on the market because they hold large amount of coins. The strategy they are using to enrich themselves will always work because of their standings. Although collectively the small investors have the number of coins to move the market to their favor, but since they don't have an organized community, their power will always remain potential and never to be used as compared to whales.

Considering all these factors, it's evident that small investors and traders cannot beat the whales when it comes to controlling of the market and since we can't beat them, it's most advisable for we the small investors and traders to join them by paying attention to their moves and strategies. We can make enough profit and save ourselves from loss in this cryptocurrency market only if we start to take the steps the whales take and selling off our coins when they begin to do so in the distribution phase.

Thank you once again professor @wahyunahrul for this wonderful lecture. Am very grateful because I have been able to learn and discover why the prices of coins are always not stable.