Who are the Cryptocurrency Whales & How Do They Affect the Coin Market?

  • Arsenii Veriho
  • Dec 6, 2018
  • Beginners
a fish that absorbs cryptocurrency coins

In the world of bitcoin, there are institutional investors and there are whales. Institutional investors, such as Goldman Sachs, are significant crypto investors from traditional markets, but whales have been here since the beginning of digital currencies - especially in bitcoin. But who are they? The whale metaphor holds well , as  these are the largest ‘hodlers’ (holders, in bitcoin-speak) of BTC, and most of them make waves from time to time.

The most famous whale is one you’re not likely to see, or at least not know it if you do. That would be the person or people under the Satoshi Nakamoto pseudonym, who invented the modern cryptocurrency and mined the first bitcoin on January 3rd, 2009. Since we can determine what bitcoin wallets he mined, we can estimate that Satoshi owns about one million bitcoin, though the full extent of his holdings are unknown. Any trading activity from these wallets would be enough to create a splash throughout the crypto community, since his true identity is still the subject of conjecture.

At the other end of the spectrum, the Winklevoss twins, Tyler and Cameron, live in the limelight, and through their well-respected cryptocurrency exchange, Gemini, they specialize in the trading of digital currencies, both bitcoin and altcoin, for institutional investors. After purchasing $11 million in bitcoin in 2013 following a successful lawsuit against Mark Zuckerberg and Facebook, they have become two of the most famous crypto investors. It’s estimated that at one time, the Winklevoss twins owned 1% of all bitcoin mined.

Not all whales are individuals, however. Pantera Capital, which was founded in 2013, is best known as the first bitcoin investment firm in America. Pantera Capital’s mandate to invest in blockchain and digital asset-related companies comes from its founder, Dan Morehead, who is also on the board of Bitstamp, a cryptocurrency exchange that CME uses for obtaining bitcoin and altcoin spot prices.

Whales will always be mentioned when bitcoin prices drop sharply, especially before an explanation for the decline surfaces. Whether true or not, whales are those most often accused of market manipulation. This is because the market capitalization of the digital space is still relatively small and a large-scale move on a cryptocurrency exchange would move the market downward significantly. However, the relative illiquidity of the market often leads institutional investors to purchase digital currency from whales themselves via Over The Counter (OTC) trades. In this way, the parties can negotiate on price without affecting the market as a whole.