There are many items in the cryptocurrency market that can affect their price, especially bitcoin. Sometimes with important news and sometimes with important events, we can expect price changes in the whole market or some cryptocurrencies. But it is important to note that the entire cryptocurrency market is affected by the price of bitcoin, and if we can predict its future price, we will probably see the general state of the market in the coming days.

One of the things that is analyzed in on chain is whales. Whales can change the price of bitcoin due to their high financial power, so by examining them, we can find out the status of bitcoin. In the following, we will explain the importance of whales and their analysis from the point of view of Mr. Alireza Mehrabi, a successful Iranian analyst.

What is on chain analysis?

Before we get into whales, we need to know a little about on chain analysis. Blockchain is the main technology in the decentralized world. That’s why there is all the information within this technology. Now, by analyzing this valuable information, individuals or companies can find very useful results and share them with other traders. Whale transactions and the transfer of their assets are among the items that fall into this type of analysis. So with the help of this type of analysis, a lot of information about whales can be obtained. But it is better to get acquainted with the word ‘whale’ better.

Definition of Bitcoin Whale

For the first time, the term whale was used for large bitcoin investors. Generally, people who have more than 1000 bitcoins are called whales. Of course, it is better to say that addresses which have more than 1000 units of this cryptocurrency are called whales, because this address may belong to an exchange or a legal entity.

There are also terms for addresses that are less than this value, but they are not discussed as they have little effect on bitcoin price fluctuations. Suppose the wallet address is about 1,000 bitcoins and the price of each bitcoin is about $ 45,000. It can be concluded that the value of the assets of this address is $ 45 million. This amount of bitcoins, if transferred or sold, can affect the price of bitcoins.

The impact of whales on bitcoin prices

As mentioned, whales have a large amount of bitcoins that, if sold, can increase market supply and cause bitcoin prices to fall. So in analyzing the performance of whales, their transactions are important.

If this asset is in a large wallet and the whale transfers it to an exchange, it means that they intend to sell it. So traders can conclude that the price of bitcoin is likely to fall. But if it is the other way around, that is, the whale transfers a large amount of bitcoin from the exchange to the wallet, it means that it does not intend to sell it in the short term, so it can be concluded that the price of bitcoin will probably increase.

But analyzing the performance of bitcoin whales is not just about bitcoin. Mr. Mehrabi believes that bitcoin price fluctuations affect the entire cryptocurrency market. If whale analysis shows that bitcoin is going to fall in price, the whole market is likely to fall for a while. This is also easy to understand. Because bitcoin accounts for about 45% of the total market capitalization, a drop in its price causes the total market capitalization to fall. So it can be said that whales can cause a pump or dump in the cryptocurrency market.

This suggests that it is not necessary to examine the performance of whales in other cryptocurrencies. Because they can only provide information about the cryptocurrency itself. However, some traders do this to make more profit.

Some famous bitcoin whales

Among the unknown Bitcoin whales, some of these whales are very popular. Perhaps listening to them can reveal the importance of bitcoin and its position for traders. Therefore, we will introduce some of them:

  • El Salvador

El Salvador is a small country in Central America whose economy is almost  bankrupt. But in a revolutionary move, the president decided to change the country’s official currency to bitcoin. He believes that bitcoin should become the only currency used in the world, and after him other countries will do the same. That’s why El Salvador has taken advantage of bitcoin price declines and is always a bitcoin buyer. El Salvador currently has about 1,500 bitcoins.

  • Elon Musk

Elon Musk is the owner of Tesla and one of the biggest fans of cryptocurrency. He always mentions cryptocurrencies on his Twitter page and has caused bitcoin price fluctuations several times.

He believes that bitcoin is excellent as a store of value and that he has this cryptocurrency. But the exact amount is not known. He is known as an activist of cryptocurrency and has found many fans.

  • Satoshi Nakamoto

The creator of Bitcoin is a big whale. There is a lot of speculation about the value of his bitcoins, but what is obvious is that it has a huge impact on bitcoin and its future.

Conclusion

Whales have a huge impact on the price of bitcoin, they can cause severe fluctuations in bitcoin and thus affect the entire cryptocurrency market. Analyzing their behavior can be useful for traders to predict the future price of cryptocurrencies.

Topics #Alireza Mehrabi #Iranian trader