Whales are held responsible for sudden price fluctuations in the crypto and traditional markets every so often. Given their capability to manipulate market prices, it becomes paramount for the general Bitcoin (BTC) investors to understand the nuances that make one a whale and their overall impact on trading.
Wallet addresses that contain large amounts of BTC are identified as Bitcoin whales. Dumping or transferring large amounts of BTC from one wallet to another negatively impacts the prices, resulting in losses for the smaller traders. As a result, tracking Bitcoin whales in real-time allows small-time traders to make profitable trades amid a fluctuating market.
Despite Bitcoin’s global and decentralized nature, tracking down and monitoring whales simply boils down to accessing readily available trading data from crypto exchanges and services. There are four primary ways to track whale activities, which include monitoring known whale addresses, order books, sudden changes in market capitalization and trades on crypto exchanges.
Monitoring known whales provide a headstart to smaller investors as the likeliness of coming across a whale trade increases significantly. Moreover, keeping track of market changes via order books and trades on crypto exchanges indicates incoming whale trades, which can be leveraged to profit during volatility.
The crypto community also uses free services that inform investors about successful whale trades, often including information about the sender’s and receiver’s wallets and the amount. One of the most popular services for automatically tracking whale trades is @whale_alert on Twitter, which issues alerts related to large transactions, as shown above.
In a recent market update, Cointelegraph revealed that on-chain data suggested that the largest Bitcoin hodlers were reluctant to act at current prices. BlockTrends analyst Caue Oliveira supported the above finding by highlighting a “hibernation” continuing among whale wallets. He added:
"Institutional movements, or commonly called ‘whale activity’ can be tracked based on the transaction volume moved over a short period of time, both denominated in BTC and USD.”
Moreover, numerous altcoins continue to mimic Bitcoin’s bearish trends as whales await a greener sentiment across the crypto market.
Grayscale Investment's latest Insight report provides interesting food for thought, pinning the start of the current bear market in June 2022, which could last another 250 days if previous market cycles are to repeat themselves.
Grayscale notes that cryptocurrency markets mimic their conventional counterparts with cyclical movements. Bitcoin (BTC) market cycles conventionally last four years or approximately 1,275 days. The firm defines a cycle when the realized price of BTC moves below the current market price.
Realized price is determined by the sum of all assets at their purchase price divided by the asset's market capitalization. This gives a measure of how many positions are profitable, if at all. Wednesday saw the realized price of BTC cross below market price, which Grayscale identifies as the start of the current bear market.
The firm believes this presents a prime investment opportunity — which is set to last another 250 days from July if the duration of previous cycles repeats itself.
Retracing history, Grayscale highlights the 2012–2015 market cycle with events like the rise and fall of the dark web marketplace Silk Road and the infamous Mt. Gox debacle, which led to the first major bear market. The development of Ethereum, major exchanges and wallet providers led to a gradual climb to the next highs in the market.
2016 to 2019 will be remembered for the boom in initial coin offerings, made possible by smart contract functionality introduced by Ethereum. Much of the capital that flowed into the cryptocurrency ecosystem in late 2017 exited the following year, as the second major bear market began.
The 2020 market cycle will be remembered as a story of leverage. Grayscale notes that investors were enticed to leverage trade with increased government spending during the COVID-19 pandemic.
A positive funding rate lasted for six months, with many traders leveraging positions with cryptocurrency as collateral. When crypto prices dipped, traders were forced to sell, which triggered a cascade of liquidations, seeing BTC drop from a November 2021 peak of $64,800 to $29,000 in June 2021.
Again leverage hurt the markets a year later, but decentralized finance's (DeFi) major centralized finance (CeFi) players faltered after attracting massive investment with attractive yields. The rest is history, as the collapse of the US Terra stablecoin (UST) engulfed the ecosystem. Over-leveraged traders and positions were liquidated across various CeFi platforms — which exacerbated market sell-offs and sunk major capital lending firms in the space like Celsius and Three Arrows Capital.
One of the leading crypto hubs in the Middle East, the emirate of Dubai, launches the Dubai Metaverse Strategy that aims to turn it into one of the world’s top 10 metaverse economies. The strategy promotes Dubai’s ambitions to support more than 40,000 virtual jobs by 2030.
On July 18, the Emirates News Agency reported about the launch of the Dubai Metaverse Strategy by Vice President, Prime Minister and Ruler of Dubai, H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum.
Al Maktoum hopes to transform the emirate into a global tech capital, focusing primarily on artificial intelligence (AI) and Web3. Dubai Metaverse Strategy goes in line with the objectives of the United Arab Emirates AI Strategy to enhance the nation’s status as one of the world’s leading countries in futuristic sectors by investing in new technologies.
The Dubai Metaverse Strategy will include research and development (R&D) collaborations to enhance the metaverse’s economic contributions, utilizing accelerators and incubators to attract companies and projects from abroad, and providing support in metaverse education aimed at developers, content creators and users of digital platforms in the metaverse community.
New governmental work models in tourism, education, retail, remote work, healthcare, and the legal sector are promised to be created within the Strategy’s framework. Its key pillars are said to be extended reality, augmented reality (AR), virtual reality (VR), mixed reality and digital twins — a virtual representation of an object or system.
The Strategy suggests promoting the full deployment of 5G networks to enable edge computing, which would allow data to be collected, stored, and processed locally via smart devices and local networks instead of the cloud.
According to the release, VR and AR have created 6,700 jobs and contributed $500 million to the UAE’s economy. Globally, the value of venture capital and private equity financing in the metaverse reached $13 billion in 2021, while real estate sales in the metaverse surpassed $500 million last year.
This Daily Dose was brought to you by Cointelegraph.