Whales - The Driver Of Cryptocurrency Value by @papi.mati
Why whales are so feared by small investors? Can small investors take advantages of their behaviour?
To answer for that question, I should start with explaining who the Whales are: Whales are the most powerful investors - people, of group of people who owns significant amount of the cryptocurrency. Thanks to their capital, they have an enormous power to control the value of the cryptocurrency and small investors don't have any tool to stop them to do it (except of multiplying their capital and becoming whale in the future as well).
Let's say that the Whale want to get rid of whole the crypto they own - that would flood the trade with new tokens and make their value drop immediately, so the small investors would loose their money too.
Usually Whales are using some kind of technic to sale their tokens. It allows them to increase the income. By knowing this technic we can behave correctly and take advantage for their actions. If we don't know it though, it's easy to make the mistake and lose the money.
1️⃣ At first Whales are buying a big amount of tokens, starting "Bullish" phase on the market. All the markers becomes green immediately as the effect of the uptrend. That supposed to motivate other investors to buy the same token and increase its value.
2️⃣ Second phase is called "distribution". Whales are trying to sell their tokens but they are doing it slowly, step by step. Market still looks good so many new investors are buying the cryptocoin and that helps to keep the price high. If the Whale would try to sell all their tokens in once, value would drop immediately, so it has to be made slowly.
3️⃣ When other investors realize that Whale sold almost whole the tokens, they start to panic and sell out their supplies. Market starts to be marked on red. That downtrend is called "Bearish".
Small investors, knowing the technics used by whales can earn some extra money and increase their savings too. The clue to do it is to find the perfect moment to invest - buy the tokens before or in the early stadium of "Bullish" phase and sell it before the "Bearish" will lower it's price.
Not being able to prognose the price in the future brings some risk of lose. If the small investors will buy the tokens in the last stadium of Bullish or distribution phase and won't sell it before the price will drop once again, they can shrink their savings. That's why it's very important to never invest spontaneously, without proper research.
Find an example of a whale's cycle on a cryptocurrency chart, and do a detailed analysis of the phases in the cryptocurrency chart
10 biggest cryptos based on coin market cap I have prepared four examples of a whale's cycle. First two are quite standard. On the left side you can see the chart of Solana token, on the right side - OKB. Both cycles took few hours only.
I all starts from the accumulation phase (marked on blue). There are some small changes in the price, but it's insignificant in a long term.
When whale buys a lot of tokens, starts "Bullish" phase (marked on green). It motivates other investors to pay for the cryptocoin and makes the price even higher.
In "distribution" phase, marked in yellow, you can see that the Whale is already selling their tokens, but still there are some new investors who are increasing the value of the cryptocoin so it remains stable in a short term.
Then downtrend, called "Bearish" starts and coin comes back to the accumulation phase value.
I have found some untypical whale's behaviour too. First one, on the left side shows Wrapped BNB chart. It's made of three mini cycles which might be analysed as one, because after that three mini-cycles price comes back to the accumulation phase value. I assume the whale wanted to extend the distribution phase by making extra investments during the Bearish. All the cycle took 24 hours instead of 3-4 hours like on the previous examples.
Second (to the right) is a chart of Fantom. It might look very typical but the unusual thing is that it took much more time than the regular cycle. You can notice that it took approx 15 days to move from the accumulation to another accumulation phase.
If you were a “Whale”, what cryptocurrency would you choose to invest or trade
In fact, using this technique allows the Whales to earn on most of the cryptocurrencies. I believe what's important when we choose the crypto to invest in is its position on the market, so we can be sure that it will not bankrupt soon. It's also good to believe in the project we want to invest.
Well, it won't be any surprise, but... as I do believe in DPoS, especially steemit, that would be probably my first choice. That way I might not only take care of my own income, but also help to distribute future tokens between other people who might need it. It's something what Bitcoin or Etherum cannot offer.
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.
First chart shows the STEEM value from the last two days, second - from today only.
Basically if I would have enough money to significantly boost the price of steem, I could start the cycle in every moment of the accumulation phase.
My profit would come from stimulating the market and motivating others to buy the tokens, I would be selling it slowly, part by part to keep the value up, maybe I could also try to extend the distribution phase by buying extra STEEM during the downtrend, like it was presented on the previous Wrapped Chart.
Conclusion
There is no surprise that on the market, like in every other place, rich people have much easier chance to become richer. Being the whale allows us to manipulate the token market and increase the savings in the relatively short time.
Small investors have much bigger risk that they might lose their savings but with the proper knowledge and thanks to the analysis of the charts, they can avoid whales traps and even increase their income thanks to the moves made by the richest. The most important thing is to be able to sell the tokens before the downtrend and never buy tokens after the uptrends, which might seem simple but in fact is a big challenge. As there is always risk of losing the money, small investors should ask themselves at first how much tokens they can afford to risk.
Thank you for reading,
@papi.mati