Crypto whales: Friends or foes?

In the closing weeks of 2024, old crypto wallets were seen waking up and moving tens and hundreds of tokens to exchanges or other addresses. Public curiosity is not the only effect of such transactions. Let’s see how whale transactions affect the market and why not everyone is happy with this situation.

Whales’ operations cause outrage at Christmas

On December 25, 2024, the Bitcoin wallet, which had been kept untouched for nearly 14 years, moved 20.55 BTC to another address. Over the years they spent in the wallet, these coins gained over $2 million in value. On the same day, a different wallet released 210 BTC after a decade of inactivity. This BTC stash increased by $20 million while it was held.

Two days later, someone moved 1,940 ETH from their pre-mining address to Coinbase. These ether tokens have been dormant since the launch of the Ethereum network. The following days saw other major transactions involving long sleepers.

For example, on December 29, someone reportedly sent 7,000 BTC from an address that had been inactive for seven years to several different addresses, splitting the total into seven outputs of 1,000 BTC.

This guy held 7,000 BTC for 7 years, it went from $62 Million to $663 Million, the funds were not sold, they just divided it into 1,000 BTC addresses. https://t.co/1FhOHUjUOH

— Sani | TimechainIndex.com (@SaniExp) December 29, 2024

Reporters share the view that these bitcoins are not sold; they moved to new wallets. In seven years, the stash value of 7 thousand BTC has increased by several hundred million dollars. On the same day, the address, which has been silent since 2014, sent 357.4 BTC to other addresses.

When whales are caught

As of December 30, 2024, there are four wallets holding approximately 650 thousand BTC; This accounts for more than 3% of the total supply. All of these addresses are cold wallets of crypto exchanges. According to the Bitinfocharts tool, fewer than 100 Bitcoin addresses hold about 15% of the entire supply; Many of these addresses probably belong to individuals. If they decide to move millions worth of cryptocurrencies, this could trigger a bearish reversal even in an uptrend.

When whales hold their crypto, they reduce its liquidity. Think about billions worth of cryptocurrency that hasn’t moved in years! Almost half of the bitcoins are held in wallets with a balance of between 100 and 10,000 bitcoins. This group of whales impacts liquidity and value the most. Many have not moved crypto for years, sometimes more than 10 years in a row, effectively keeping large amounts of crypto out of the market.

When whales sell

When whales get rid of their cryptocurrencies, they are signaling to other investors that someone who valued the asset in question for millions has decided that the asset is no longer worth it. And everyone sees it!

Whales’ transactions do not go unnoticed because, thanks to the transparency of the Bitcoin network, these addresses are known, listed and tracked. Every major transaction makes headlines and causes a lot of chatter on the internet. Some people, especially those who do not follow a trading/investing strategy or even have one, get caught up in emotions and panic. When many people panic at the same time, it can cause the market to reverse or increase price volatility; though not for a long time, but still. Whales, not wanting to cause any disturbance, are slowly emptying their crypto.

Most transactions described in the previous section seemingly have a single purpose: Holders move crypto from legacy Public Key Hash (P2PKH) addresses to modern wallets that provide better privacy and security. These cannot be attributed to the so-called “whale dump” that serves as a bearish signal.

Alleged market manipulations

On December 27, 2024, “Rich Dad Poor Dad” author Robert Kiyosaki used X to accuse BlackRock CEO Larry Fink of abandoning Bitcoin. According to Kiyosaki, BlackRock is “pressuring the price of Bitcoin so that whales can buy Bitcoin below $100,000.”

Larry Fink is abandoning Bitcoin. VIVEK warned Larry Fink that BLACK ROCK was Marxist. Vivek warned that Fink and Black Rock are Shareholder Capitalists, not Shareholder Capitalists. Share Capitalists are Marxists… Like Klaus Schwab: “One day you won’t own anything and…

— Robert Kiyosaki (@theRealKiyosaki) December 27, 2024

While we do not have evidence to support or dispute Kiyosaki’s claim, we must acknowledge that institutions and individuals holding large amounts of cryptocurrencies are frequently subject to such claims. The alleged market manipulation by Tether is one of the most well-known cases. The battle for truth continues as of December 2024.

Why would anyone accuse whales of deliberate price manipulation? First of all, whales can really influence prices. Whales can reduce the price by selling large amounts of BTC, repurchase those sold during the pullback at a discounted price, and enjoy the profits from price differences. Other tactics available to whales include rug pulling and wash trading.

Ripple Labs has admitted to using trading bots in the past. However, he does not fully agree with the accusations of using them to manipulate the price of XRP.

Crypto whales: friends or foes?

Just like natural whales in the oceans, crypto whales are neither friend nor foe. Rather, they are large institutions minding their own business. If we know how they impact the market when they spend crypto, we can react appropriately to whale alerts and avoid trouble. The only exception is when whales deliberately manipulate prices. However, the same path, that is, preparation and precaution, can save us from these too.