How do crypto whale trackers operate and what are they?

How do crypto whales work?

Most cryptocurrencies have a handful of large holders of the asset who can affect the price of the crypto asset. It is beneficial for active traders and investors to comprehend the market actions of these whales.

Large cryptocurrency holders are referred to as “crypto whales.” They might be people or companies, and they frequently own more than 10% of cryptocurrency. For instance, because MicroStrategy participates in the market and owns almost 130,000 Bitcoin (BTC), they have the power to influence the price of BTC. As a result, keeping tabs on crypto whale activity offers timely information on a cryptocurrency asset’s price trend.

Not only is this a crypto phenomenon. In conventional markets, an asset’s price will rise or fall depending on whether a major player like Warren Buffett, a company, or a hedge fund discloses that they have purchased it. Having said that, the market usually reacts to these players selling an asset.

All transactions involving cryptocurrencies and non-fungible tokens (NFTs) take place on the chain. Because of the openness that blockchain provides, whale-owned wallet transactions can be identified by the number of cryptocurrency positions they hold. The behavior of the larger market can therefore be predicted by tracking these wallets.

What does whale tracking in crypto mean?

The activities of crypto whales can be tracked using specialized tools. These tools can offer analytics on whale activity and, in some cases, can help the user make an investment or trading decisions.

The volume of cryptocurrencies entering and leaving exchanges is continuously monitored by cryptocurrency traders and investors. Large-scale transfers of cryptocurrencies like Bitcoin or Ether (ETH) into an exchange are typically accompanied by sell activity, which lowers the price. On the other hand, if cryptocurrencies move from exchanges into wallets, it is thought to be a sign that prices are about to increase.

In certain circumstances, whales may decide against influencing the markets by making purchases or sales on an exchange. They would conduct an OTC transaction involving two wallets. By sending Bitcoin to a wallet that will return USD Coin (USDC), for instance, they might sell BTC without the market seeing the transaction.

Investors can examine a major transaction that is recorded on the blockchain to identify the wallets involved. The wallets can be referred to as crypto whale wallets if they hold significant cryptocurrency positions. From that point on, keeping an eye on these wallets and the transactions made inside might be helpful in analyzing the price changes of the cryptocurrency stored there.

The NFT markets can also benefit from whale tracking. Large holders of the collection are present in most NFT communities. These NFT holders are frequently recognized by the local community. Investors can make prompt buy/sell decisions by monitoring the movements of these whales’ wallets.

For instance, strong convictions may be shown if a renowned NFT collector or a whale completely destroys a non-fungible token collection. That would be seen by NFT collectors and the whale, who would then buy the non-fungible tokens. Throughout the NFT bull market in 2021, Gary Vaynerchuk’s actions were repeatedly observed.

What purposes do crypto whale tracking tools serve?

Due to the transparency that blockchain enables, investors can identify wallets that whales own and watch them for purchase and sale activity with the help of whale tracking tools. The automation of the tracking process is aided by the use of tracking tools.

The majority of cryptocurrency owners have multiple cryptocurrencies in their portfolios. They will need to locate and keep tabs on many wallets that store significant amounts of the cryptocurrency they are interested in in order to stay aware of market moves. This functionality is provided by on-chain analytics technologies.

In a similar vein, NFT collections can be monitored for events like the floor sweep, the selling of NFTs at the bid price, and the listing of new nonfungible tokens below the floor price, among others. The lowest price at which a nonfungible token (NFT) can be purchased is known as the collection’s floor price. Sometimes the floor price decreases when there is little demand for an NFT collection.

One NFT holder will frequently advertise their NFT below the floor price to start the decline in floor prices. Therefore, such activities can be identified using whale tracking techniques so that an investor is made aware and can take appropriate action.

On the other hand, a floor sweep suggests that there is a great demand for an NFT collection. This is the act of purchasing a large number of nonfungible tokens from a collection that are being offered for sale at the floor price. When a whale’s wallet sweeps the floors of a new collection, whale tracking technologies can detect it. Investors in NFT will be made aware, and they will then be able to follow the new collection.

What are the typical crypto tools for tracking whales?

Investors can identify whale activity and make prompt and informed decisions by using whale tracking software like Whale Watchers, Whale Bot Alerts, and others.

The capabilities of whale monitoring tools vary; some are as simple as a window on top of a blockchain, while others offer analytics and graphing skills across numerous blockchains. While some solely offer NFT whale tracking, some also cover crypto whale monitoring.

While some analytics systems only offer customers basic insights and alerts on whale activity, others offer more in-depth learning opportunities on charts and analytics. Some only provide a straightforward feed, while others use Twitter and Telegram to update subscribers.

Whale Watchers, Whale Bot Alerts, Whale Map, Whale Alerts, Clank App, and Coincarp are a few of the essential tools for whale watching. In addition to these, programs like Solscan and Etherscan sit atop their own blockchains and include whale-tracking features.

With whale tracking, one can become as technologically sophisticated as feasible. The market’s response to a whale transaction, however, is not always predictable. Even if knowledge of whale behavior is useful, it is only one factor that will have an impact on how cryptocurrencies are priced. This is particularly true in a market where macroeconomic variables dominate.