How whales manipulate cryptocurrency market? Whales are usually called those who have significant financial resources and can have a substantial impact on the financial market. But is there such an impact on the cryptocurrency market? How big is it?
Manipulation or market laws?
Despite the many indirect factors that point to the manipulation of the cryptocurrency market, not everyone agrees that such manipulation exists. As one crypto-enthusiast on Reddit put it, manipulation exists only in our head.
MAYBE WE REALLY INSPIRED THIS IDEA AND REJECT THE TRUE REASONS FOR PRICE CHANGES?
For example, many point to such fundamental factors as the balance between supply and demand, which often creates a price fluctuation. Or can the market be managed by several prominent players? Or maybe we exaggerate the influence of whales on the cryptocurrency market?
But to understand this, let’s consider the facts that we have available.
According to the Etherscan tracking service, EOS owns 10 of the largest wallets for almost 50 percent of all coins. Block.one, the private company behind this project is the largest owner.
it OWNS 10 PERCENT OF THE TOTAL NUMBER OF COINS
The names of other large holders are anonymous and may be individuals or even exchanges.
Often called whales, large owners can significantly influence the price of the coin. Any potential coordinated action could put small investors at a disadvantage. According to CoinMarketCap, during almost a year’s ICO, the price of EOS tokens has grown about 13 times, and now the market capitalization is about $ 12 billion.
Ether and others
High concentration of ownership is not unique to EOS. For example, in the same Ether, 100 of the largest wallets control 40 percent of all coins. And large coins of such coins as Qtum and Storj, managed more than 90 percent, according to the October analysis of Alex Sunnarborg, a partner and founder of Tetras Capital.
But what about Bitcoin?
November 12, someone moved almost 25,000 bitcoins, costing about $ 159 million on the exchange. The news soon spread through online forums, and bitcoin traders argued about whether this meant that the owner was going to sell the digital currency.
Holders of a large number of bitcoins are often called whales. And they become a concern for investors.
THEY CAN SINK PRICES BY SELLING PART OF THEIR ASSETS
What happened in the second half of December.
About 40 percent of bitcoins belong to about 1000 users. They can sell them at any time. Moreover, whales can coordinate their actions. Many of the big owners had known each other for years and have been bitter from the first days when they ridiculed it, and they can potentially unite to sink or support the market.
How whales manipulate cryptocurrency market or call to a friend
“I think there are a few hundred guys,” says Kyle Samani, managing partner at Multicoin Capital. “They all probably can call each other, and they probably have,” says Kyle Samani, Managing Partner of Multicoin Capital. One reason to think so: at least some types of information exchange are legal, says Gary Ross, a securities lawyer at Ross & Shulga. Since bitcoin is a digital currency, not a stock, he says that there is no ban on trade, in which the group agrees to buy enough to push the price, and then sell in a few minutes.
Answering a question about whether large holders can unite to manipulate the market, Roger Ver, a famous early bitcoin investor, said by e-mail: “I suspect that is likely true, and people should be able to do whatever they want with their own money. I’ve personally never had time for things like that though.”
“As in any asset class,
large individual holders and large institutional holders can and do collude to manipulate price
In cryptocurrency, such manipulation is extreme because of the youth of these markets and the speculative nature of the assets,” wrote in an e-mail Ari Paul, co-founder of BlockTower Capital.
We look at large wallets but do not understand anything
Like most hedge fund managers specializing in cryptocurrency, Samani continually monitors the trading activity of addresses that are known to belong to the largest investors. When he sees movement, Samani immediately calls the likely sellers and can often get information about the motives associated with their sales and their trading plans, he says. Some funds eventually buy other people’s coins directly, without going to the open market, so as not to affect the price of the cryptocurrency. “Investors are generally more forthcoming with other investors.
We all kind of know who one another are, and we all help each other out and share notes
We all just want to make money,” Samani says.
Ordinary investors, although they can see movements in wallets, but are unaware of the plans and motives of whales. “There’s no transparency to speak of in this market,” says Martin Mushkin, a lawyer who focuses on bitcoin. “In the securities business, everything that’s material has to be disclosed. In the virtual currency world, it’s very difficult to figure out what’s going on,” says Martin Mushkin, a lawyer who focuses on bitcoin.
Looking at the details closer, it becomes clear that the real owners earn, which, if necessary, cooperate with each other. And ordinary investors are likely to lose out on active trading. The impact of whales on the cryptocurrency market is enormous. Despite this, many remain optimistic, like one trader named Sebastian Kinsman, who said: “I believe that it’s common sense that these whales that own so much bitcoin and bitcoin cash, they don’t want to destroy either one.” But what if the cost of these coins will rise to unprecedented heights, will they then keep these coins or sell?