Have you ever gone whale watching? Imagine the huge splash a whale would create in the ocean with a single jump. That is similar to what happens when large holders of tokens in Web3 decide to move their tokens either from one wallet to another or carry out transactions.
A Crypto whale is an individual or entity that holds large amounts of cryptocurrency. Since they have substantial holdings, they have the power to influence the market. Whales often attempt to control prices and sometimes they succeed. As a beginner in web3, spotting a whale early can help you ride along making a profit and avoiding losses where necessary.
Whether you’re new to the crypto space or a seasoned investor, understanding whales can provide valuable insights and potentially guide your investment decisions.
Understanding Crypto Whales
Like the largest sea mammal they mirror, crypto whales create a big splash in the web3 ocean with every transaction they make. They have the power to influence the market due to their substantial holdings. As a newbie in web3, whale watching gives you the advantage to watch for when to go on a buying or selling spree.
However, whales can be quite a problem for web3 as they lower the liquidity flow of certain coins. For instance, if a large amount of a coin is sitting unused and unassessed in a wallet, there will be fewer coins available for circulation in the market. Also, every time a large quantity of a token is moved in one transaction, it can create price volatility. As whale activity influences price not just by the inflow mean, but also by the public interest that a particular whale’s activity manages to gain. For instance, in April 2019, the price of Bitcoin increased by nearly $1,000 within two hours due to a single order of 20,000 BTC executed across three exchanges.
Source: Market Insider
Crypto whales fall into two categories: retail whales (individual investors) and institutional whales (companies or organizations).
Benefits of Whale Watching
By observing whale activities, you can gain valuable insights into the crypto market. Whale watching helps you identify market trends and potential investment opportunities. By learning from whale strategies and portfolio management, you can make more informed decisions. Additionally, analysing whale behaviour can provide insights into the overall market sentiment.
Tools and Resources for Whale Watching
To engage in whale watching, there are several useful tools and resources available. Whale tracking platforms and websites allow you to monitor whale transactions and movements. Social media and discussion forums provide a space to analyse and discuss whale activities. Analytics tools and data sources offer valuable data for tracking whale transactions and behaviour.
Blockchain Analysis
Web3 is built on the blockchain and you can study transaction data which is available on the open-source network. For instance, Web3 beginners can dig around on-chain using platforms such as Etherscan, Dune, and Nansen to study the transaction pattern of the largest holders of any token.
A beginner can use the following steps and tools to study whale activity
Step 1: Identify the coin you will like to study (Apecoin)
Step 2: Visit the Etherscan ‘Holders’ page of ApeCoin or any token of your choice. The holders’ page for ApeCoin ($APE) is https://etherscan.io/token/0x4d224452801aced8b2f0aebe155379bb5d594381#balances. By looking through these wallets, you will identify some interesting patterns, price growth and decline as well as changes in large wallet holdings.
Step 3: Using DexTools, you can visualise the price action of your selected token. Simply paste the token contract address you find on Etherscan, and you can gain access to a list of recent DEX trades involving that specific coin. If you classify the recent trades based on the total value traded, you can identify the wallets of large players moving their holdings.
Step 4: Next to each trade above is a “Maker” column when you click on them, you are redirected to the Etherscan page where you can view each of the wallets responsible for the specific transaction.
Step 5: With the following tools you can now analyse the trade history
- Dune Analytics
- DeBank
- Arkham Intelligence
- Nansen
Each of the tools listed above is unique and would fit the peculiarity of your whale-watching activity. If you decide to use Dune Analytics, you can analyse the wallet behaviour of $APE and analyse the overall profit and loss of any wallet. You can mirror the wallet activity and trade using what the whale is doing. Dune Analytics also enables you to analyse tokens of various EVM chains including Ethereum, Polygon, Arbitrum, and Optimism. You can simply search for the token name, select a dashboard and find the needed information.
Exchange Data
Most web3 tokens are listed on crypto exchanges and you can search the public order books to find the current buy and sell orders. You can identify whale activity by watching if the buy or sell orders are more significant and higher than usual.
Social Media And Forums
You can follow whale activity on social media. Platforms like @whale_alert on Twitter give regular updates on whale activity. Also, some whales occasionally talk about what they plan to do on social media. For instance, Michael Saylor, a prolific bitcoin whale with about 3 Million followers on Twitter usually announces on Twitter when Microstrategy, his business intelligence and analytic company purchases bitcoin.
Whale Watching Tools
We have already taken a look at some platforms and tools that can help you track whale activity while discussing the blockchain analytics method. Some tools that can help you analyse patterns of whale movement through blockchain data, exchange volumes, and market movements include:
- Whale Alert
- Watcher Guru
- Whalemap
- Dune Analytics
- DeBank
- Arkham Intelligence
- Nansen
Whale Watching Strategies for Beginners
As a beginner, here are some simple strategies to get started with whale watching.
Set up watchlists and alerts:
Set a watchlist either by setting a price alert on any crypto exchange you own or using altFINs. You can easily create multiple watch lists using altFINS and then track the on-chain activity of any of the tokens you are alerted for using the strategies we have discussed earlier.
Analyse whale transactions and movements:
Look for patterns or significant transactions that might indicate market trends.
Identify patterns and correlations:
Find connections between whale activities and price movements. Sometimes, whale activities have little effect on price movement, so you do not have to go on a buying spree simply because some tokens were moved from one wallet to another.
Combine with fundamental and technical analysis:
Consider other factors such as project fundamentals and technical indicators alongside whale analysis. You can not make a decision just on whale movement, you have to create a balanced analysis.
Note: While whale watching can be beneficial, it’s important to be aware of its risks and limitations. Market manipulation and fake whale activity exist, which can mislead smaller investors. Additionally, interpreting whale behaviour accurately can be challenging, as false signals may occur.
Windup
Whale watching is not a one size fits all solution for trading. You have to tread with care as some whales are trying to manipulate the market. Responsible whale watching involves you utilising available tools and resources, you can enhance your understanding of the market and potentially make more informed investment decisions.
Make no mistake, you can score big wins whale watching but it shouldn’t override fundamental and technical analysis as well as your gut feeling. With a sound strategy and due diligence, you can make substantial gains using the resources mentioned in this article.
Happy whale watching in the exciting world of Web3!
