Bitcoin whales are high wealth investors who own and hold massive sums of BTC. When they buy or sell large amounts of the crypto asset, they make a major splash in price action.
But have you ever wondered why large crypto buy or sell orders can move the market so significantly? An image circulating the web depicting what happens when $100 million in sell orders hit a crypto platform’s order books.
Whale Watching Across the Crypto Market
Big players, early adopters, and high wealth individuals make up a sea of Bitcoin whales with massive BTC holdings.
These investors and traders are so important to the overall market, that dozens of alerts have been set up to watch whale wallet inflow and outflow, and track when they move BTC to and from one wallet to another.
Oftentimes, a big transfer of BTC will precede an exceptionally large move in the cryptocurrency market.
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Due to how large of an impact these whales can have on the illiquid asset class, these whales regularly buy and sell BTC on the OTC market, or “over-the-counter” trading desks.
These are typically middlemen who connect one large investor with another.
The reason whales take such measures to exchange Bitcoin, is to avoid enormous slippage that occurs when exceptionally large orders are placed. Unless they are intending to use their size to their advantage to move the market purposely.
slippage as high as 85bp looks like. Never seen anything like this before. pic.twitter.com/1tieA59kSx
— light (@lightcrypto) June 11, 2020
Slippage Is Why Whales Can’t Market Buy or Sell Bitcoin In Large Sums
In the early hours of the morning, 20 consecutive $5 million USD sell orders of Bitcoin pushed the asset’s price down lower and lower.
In the tweet above the timestamps of each sell order triggering shows just how much the price of Bitcoin dropped in just seconds with such a large order wiping out the order book nearly completely.
In under two minutes, the price per BTC dropped over $110. As large of a move this is, the market absorbing such a large amount of consecutive sell orders of this size is incredibly healthy, and potentially bullish.
Related Reading | Number of Bitcoin Whales Hits Previous Pre-Bull Run Level
It also could be a sign that demand is beginning to outweigh supply.
The theory circulating the internet currently is that this whale was pushing down the price of Bitcoin to fill long orders. But because the market so well absorbed the selling, these orders never got filled, and this whale’s strategy may have blown up in their face.
The less whales are able to move the market, the better off Bitcoin is. The wild west of cryptocurrencies may finally be able to shed the manipulate that has long plagued the space.