The term “crypto whales” refers to users holding large amounts of crypto assets. These holders may not only be individuals but also hedge funds or organizations that invest on behalf of their customers. For instance, according to Etherscan, the largest holder of ETH is the Beacon Deposit Contract, which played a crucial role in Ethereum’s transition to Proof of Stake (PoS) as a repository for staked ETH.

Following this, large ETH holders include Wrapped Ether and exchanges like Binance and Kraken.

The concentration of large crypto amounts makes crypto whales powerful, enabling them to manipulate the market. Holders of modest cryptocurrency amounts generally don’t significantly impact the market, except in cases of tokens with low liquidity and trading volume, where even small transactions can shift prices.

A BTC whale is defined as a holder of over 10,000 BTC. Similarly, there are ETH whales and whales for other tokens or NFTs, often possessing high-value NFTs from collections like Bored Apes and CryptoPunks. The threshold for whale status varies based on the coin’s market size, with criteria for altcoin whales typically being lower than for BTC, especially for those with smaller market caps.

Whale moves

Whales can impact a cryptocurrency’s price by the size, source and intent of their transaction. These activities include significant purchases and sales. However, large transfers don’t always suggest an intent to trade since they could be transfers to a cold wallet or over-the-counter (OTC) trades. The age of wallets also matters: old and inactive wallets making transactions for the first time may attract increased attention. Regardless of motivations of whale moves, monitoring significant market participants can be crucial, as their actions may indicate future market trends.

Often remaining anonymous, crypto whales still leave a trail due to blockchain’s transparency, revealing their influential addresses. This visibility allows for analysis and speculation regarding whales’ market movements. Blockchain explorers provide insights into wallet ownership, supply, distribution, transaction volume and concentration. Users can also trace the movements of other wallets of interest, including those belonging to whales, directly from their wallets.

How whales can affect projects and the overall market

• Wealth concentration in high-profile wallets can reduce cryptocurrency liquidity, limiting amounts of available tokens for transactions. Whales heighten price volatility, especially with large transactions. Market participants remain vigilant for signs of selling off assets on a large scale, potentially causing price drops.
• The pump and dump strategy involves a group of crypto whales or large-scale investors collaboratively buying up substantial amounts of a cryptocurrency to artificially inflate its market price. This surge in buying activity generates a ‘fear of missing out’ (FOMO) among regular investors, driving the price even higher. Once the price reaches a significantly inflated level, the crypto whales sell off their holdings at this peak, reaping substantial profits. This sudden sell-off causes the price to drop, often leaving other investors facing considerable losses as the market corrects itself.
• Whales can strategically short-sell a cryptocurrency to drive its price down. This involves borrowing the cryptocurrency and selling it with plans to repurchase it at a lower price. The initial sell-off by whales can alarm other investors, prompting them to also sell their holdings in fear of further losses. This collective action accelerates the price’s decline, allowing whales to buy back the currency at a much lower price, potentially leading to significant market disruption and losses for uninformed investors.
• ‘Trade washing’ creates a false appearance of increased market activity through simultaneous buying and selling of the same asset. Whales can also influence market direction by placing large sell or buy limit orders at a specific price level, creating sell/buy walls. This tactic can prompt other traders to adjust their orders, affecting the asset’s price.
• Whales with governance tokens hold considerable power in protocol decision-making, creating centralization risks. 
• Additionally, the participation of whales in ICOs and token sales can significantly impact the success of new projects.

It’s crucial to recognize that not all whales engage in market manipulation. But thanks to  understanding how whales can affect the market, investors can safeguard against potential manipulations.