Bitcoin Whales and How They Make Market Waves

Sometimes when there’s a huge drop in bitcoin’s price traders called “bitcoin whales” are blamed for dumping on the market. Bitcoin whales are individuals or groups who hold vast quantities of bitcoins and can sometimes sway the market towards their preferential price. These market movers have been around since the early days – ‘shaking out weak hands’ many times over the years – but have also failed their missions at times as well.

Also read: Following Money Through the Bitcoin Laundry Is Not So Easy

What is a Bitcoin Whale?

If you trade bitcoins or altcoins, you’ve probably heard the term “whale” before as the name is used to describe big cryptocurrency holders. The term is used this way because whales are the biggest creatures in the ocean and they can overpower smaller fish with their large size. Bitcoin whales are looked at similarly because their extensive holdings can affect large schools of smaller traders with just a few successful trading methods. Additionally the smaller the market and less liquidity means whales can devastate smaller altcoin markets way more easily than bitcoin. We also assume that Satoshi Nakamoto may be the biggest whale of all as the creator allegedly owns 1 million bitcoins.

Rinse and Repeat

Bitcoin Whales and How They Make Market WavesThere are many trading maneuvers whales use to profit, like using a trading tactic commonly called the ’rinse and repeat cycle.’ The rinse trade is used in many types of markets and can be effective if timed correctly and very profitable if you are a bitcoin whale. The trader with a lot of holdings starts selling bitcoins lower than the market rate which at times can cause a panic sell off by small-time traders. The trick is the whale sold just below the current market value and just enough to watch panic ensue. Then the whale waits and watches the panic selling take place until the bitcoin price reaches a new low. At this point, the whales quickly scoop up way more bitcoins than they first started with and after the ‘rinse’ they usually ‘repeat’ this type of trade often. People speculate that there are many ways whales can throw their ‘BTC weight’ around to either push the price up or down to accumulate more bitcoins. Further, whales are not just individuals and can be an organization like a bitcoin investment fund as well.

Utilizing Buy and Sell Walls

Bitcoin Whales and How They Make Market WavesWhales in a sense don’t even have to trade their bitcoins to affect the market as they can also bluff with buy and sell walls. In cryptocurrency markets, exchanges use an order book to facilitate trades where a buyer can set up an order to buy or sell at a specified price other than the spot price. For instance, if the market drops traders will usually buy at a lower bid and sell if the price reaches a higher level. In order to place an order in the exchange’s order book, you have to legitimately own enough funds to cover the order. This means a whale and even smaller traders in many ways can bluff and make it seem like a buy or sell walls exist. However, often times large buy and sell walls disappear just before the price gets close enough because a big player was just bluffing. Nevertheless many buy and sell walls are very real and can change the odds rather quickly if they manage to liquidate someone’s assets.

OTC Markets and Dark Pools

Sometimes whales don’t purchase or sell on traditional exchanges because their holdings or orders could cause a stir in the market. For cryptocurrencies over the counter trading (OTC) or “dark pools” is where big buyers and institutional traders can purchase vast amounts of bitcoins without being seen by the public eye. Dark pools are similar to OTC trading as they are usually found on exchanges that enable ‘off the record’ trades which ensures a whale’s moves are more private. Typically OTC markets and dark pools only allow traders who purchase an abundant amount of bitcoin at one time and set minimums for entry.  

The Infamous Bear Whale

Back in October of 2014, there was an event where a massive bitcoin whale liquidated 30,000 bitcoins for $300 a piece. Many traders and speculators thought it would wreck the market at the time but instead, the order was ripped through by buyers and bitcoin’s price subsequently rose to $375. The event was remembered forever, and the trader will forever be known as the “bear whale.” The 30,000 BTC order was also recorded on video alongside many memes and graphics depicting the epic slaying of this gigantic whale. Many bitcoiners felt victorious that day in October because a whale of that size failed to sway the market.

Bitcoin Whales and How They Make Market Waves

Whales Are Often Blamed for Big Market Shake Outs

Whales have been discussed in the bitcoin space for quite some time, and they are usually blamed for unexplainable market phenomenon. Further, there are a lot of conversations across bitcoin forums asking the question — How many bitcoins does it take to be a whale? It seems the answer varies from 1,000 bitcoins to 10,000 bitcoins according to multiple threads on and Reddit. Many people believe that whales can still affect the market due to bitcoin’s relatively small market capitalization where multi-million dollar orders can still shake things up. As bitcoin markets become stronger and gain more liquidity, speculators believe it now takes bigger bitcoin whales to shift the trading waters.

What do you think about bitcoin whales? Do you think large holders can still sway the market? Let us know what you think in the comments below.

Images via Shutterstock, Pixabay, Bitstamp, and Christopher Steininger. 

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  • forlotto forlotto

    Good article but the new age tact of whales is first to find an event such as the bit coin fork right now it is much easier to capitalize off of peoples emotions when there is an event taking place it used to be halving was a targeted area as well but not so much talked about anymore. So what they do is they find a way to first they find some dirt dig it up a bit and then plant the seeds of fear and if they start to see things growing out of the event they then begin to take advantage of it. The same thing happened with ETH. People Quadrupled their holdings over the last month some of them. The Whales main goal is to control more stake each time to make things easier for the to manipulate so they don’t become the bear whale. As I say look for an event to make it easier to fool people that the sky is falling. Right now BTC should be sky high the way I look at it you have the potential to have a lot of extra earnings with BCC but the whales have psy oped everyone and the exchanges haven’t helped much either. All BCC needs for acceptance is one exchage they don’t need your exchange should you decide you don’t want to use it. Personally I think the other exchanges are just waiting so they can claim your BCC give it a few months and it will be on the exchange and all the BCC that should have been yours is now theirs.

  • chutac

    In my next life, i will like to be a whale. Being a mere fish sucks!

  • Dr. Bubó

    There is no such a thing that market manipulation: the only way to push the price down is selling. When someone wants to capitalise on a price rise, he usually buys, not sells.

    • dr evil

      the wale buys maybe to push.. it up.. but meanwhile he’s selling bigger amounts to the new buyers. if they sell all their coins today.. market is back to single digits they would crash it.;

      • Dr. Bubó

        “the wale buys maybe to push.. it up.. but meanwhile he’s selling bigger amounts” you cannot buy and sell the same time. You net buyer or seller.
        “bigger amounts to the new buyers” how do you know who is the new buyer when you trade on the market???
        “if they sell all their coins today.. market is back to single digits they would crash it” it is true to EVERY market, but only happens when the seller thinks the assets real value is 0.

    • Jason Riordan

      you would definitely benefit from a macro economics class. I am not trying to belittle you or anything, but your statement highlights your lack of knowledge. If you are investing your money into this, do yourself a favor and gain as much knowledge as you can. You will have a better understanding of what factors are responsible for monetary movements.

      • Dr. Bubó

        Yes, I am new to the markets, started only in 2005, please enlighten me.

  • Governments liquidating seized coins could spur a whale-like event without care for the market response. I am not sure the rinse repeat could happen, but the US Treasury does that every single day to manage the National Debt. Just examine the daily report; tells you exactly how much they bought and sold the balance before and after and sweetly the gain is zero in the end. The Treasury couldn’t just payoff the Debt that would be too disruptive to the status qou and tank futures. Just managing the accrued interest is enough. Love your article. It is very real and very probable to mitigate risk and gain with the right influencing amount at a given time frame.

    • Leroy Perkins

      The Fed(s) getting into the market with the purpose of killing it has always been a concern of mine. The US Fed could buy the whole crypto world with what they keep in petty cash. They could do it over time and end up almost completely controlling it within a relatively short period. Obviously the price(s) would go up during the buy period and people getting out would make a good profit, but then it would be over if they held the coins and never did anything with them. Or they could dump them, running miners out of business and essentially killing the whole chain. It wouldn’t surprise me if they have contingency plans to do just that if cryptos get big enough to be viewed as a threat to their power over money.

      • It is a long shot, but probable. Probable, only because they could. I expect they fear the revolt if they do. It is much better to influence a population against the item before controlling the item. The power of consensus. I hear the weeping of the malcontent and they are my brother, I must help and protect my brother. They can’t get to full control from zero. Building a consensus. Or, manufacturing one. Doesn’t it feel like we are in that cycle, now? The Fed Faq on their own website,”The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. Safer? More Flexible? More Stable? A monetary and financial system? You have to ask yourself,”Who decided?” Woodrow Wilson signed it into Law at the end of 1913. The Reserve Note or the “Dollar” was official. Congress could amend it so more than the dollar is legal or replace the dollar. Or, as they amend most often, supplant other forms of currency as illegal. Several Market problems arose and culminated in the 1929 Market crash. Gold and Silver were the currency of that time before 1913 and a mass hoarding started and was made illegal by Executive Order 6102 by FDR in 1933. So, you see if you read History in the light of currency power, you might come away with a different understanding. I am very pleased to live in a time of virtual currency. It will be very difficult to control and when it is, it will be here to stay and there will be many many countries well versed and knowledgeable. Instead of the very few like in the past. Let’s hope the consensus is Us not the power-few.

  • When you hold large numbers of Bitcoin, you can have an influence on the price movement.

  • Jeremiah R.

    TL;DR: Never panic sell. Buy when everyone else is selling, sit on your coins until you really need the money. That’s how I’ve accumulated >240 BTC, without ever using cash.

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  • RomertL

    I don’t like them one bit, highly immoral behavior to bluff with fake sell walls or sell too cheap in order to cause panik and buynbaxk cheaper. The George Soroses of crypto-currencies

  • John B. Andelin

    I think the number of “bitcoin whales” is getting progressively smaller with time. This is one of the aspects of bitcoin that is appealing to me when I consider alt-coins. The number of early adopters holding thousands of bitcoins is becoming smaller and smaller. Every time there is a big sell-off, I imagine that there are holders of large numbers of bitcoins who are taking profit. As time goes on and the bitcoins become re-distributed among millions of people, each holding smaller amounts, the price will not be nearly as volatile. This fact puts bitcoin way ahead of all other alt-coins.

  • Dr. Bubó

    It means he buys first and THEN sells. It is not manipulation then, just simple speculation. He tries to buy on a lower price and to sell on a higher price. It is normal market behaviour, the market is traded not manipulated. What you are struggling with is the definition of manipulation.

  • Marco Maltese

    30000 BTC now worth 100 million USD 😂😂😂😂