Anyone connected with cryptocurrencies in one way or another has probably heard about the whales, those who have a huge influence on the Bitcoin market. Because of their presence, many potential investors are wary of buying, because the whales are able to manipulate the price of cryptocurrencies. Whales are not prone to emotional and spontaneous decisions. None of them invest all of their money in cryptocurrencies; they use digital assets to diversify. So is Bitcoin price sinking because of whale deposits?
What you should know about whales
According to a recent study by blockchain-related company Chainalysis, the Whale Group has about 1,600 investors who collectively own about one-third of the total amount of bitcoins available. Not surprisingly, many potential investors are wary of entering the space, given the potential for market manipulation. Novice investors should not target mass purchases of “whales,” as they can often coordinate their trades or report them to a select circle and potentially collapse or boost the market.
Nevertheless, many experts believe that the days of this group’s dominance are numbered, and below are three reasons why bitcoin whales are losing influence in the space. There are no laws about manipulating the crypto market right now, and assets are highly volatile and speculative, so these stories are not uncommon.
- Reason one. Emphasis on education in cryptocurrencies and blockchain. The need to learn and improve your skills certainly applies to cryptotechnology. Blockchain was once shrouded in a veil of mystery; no one knew exactly how it worked or how to explain it. Nevertheless, 2018 was a year full of big breakthroughs in the application of this technology.
- Reason two. Regulation. Recent years have also been pivotal when it comes to regulating the cryptocurrency space. In addition to the SEC starting to take legal action against dark horses and unscrupulous ICOs, regulators and the Department of Justice are also involved in combating any dangerous market manipulation. This will definitely make the whales calm down and stop “muddying the waters”.
- Reason three. Growth of institutional presence. Currently, the whales continue to influence investments, but in the long term and as the cryptocurrency market matures, their ability to influence prices will decrease significantly. First, the larger the cryptocurrency market, the less chance the whales have. Over the past few months, the cryptocurrency sector has experienced a wave of institutional interests coming in, including JP Morgan, which announced in March the launch of its own blockchain network. Nasdaq and the Gemini cryptocurrency exchange announced a collaboration in April, and Goldman Sachs discussed the start of Bitcoin trading.
So the influence of the crypto whales will soon cease to be so weighty. That means it will be much harder for them to manipulate the value of cryptocurrencies, so you don’t have to fear such manipulation.