The world of cryptocurrency is an erratic and uncertain one, with fortunes being created and gone in the moment of. In this high-risk game, some of the most fascinating and frequently notorious players are”the “whale.” These are those who own large amounts of a specific cryptocurrency and their actions could be a significant influence on the market. A strategy that whales use is to play games of sassy with investors who are short, which puts them in an emotional state called FOMO (Fear of missing out). In this post, we’ll explore how these crypto whales control emotions, and offer concrete examples of their strategies.
Understanding Crypto Whales
Before we begin the world of sentiments it is important to know what a cryptocurrency whale. Whales are generally large holders of cryptocurrencies, usually having wallets that contain millions, or even trillions in digital currency. Their power and size enable them to influence the market to their advantage by way of massive trades, announcements of strategic importance or even subtle manipulating sentiment.
Crypto Whales The Pump and Dump scheme
One of the most common strategies used by cryptocurrency whales involves using the “pump and dump” scheme. In this case the whales will accumulate a substantial amount of a lower-capacity or lesser-known cryptocurrency. They then employ a variety of tactics to generate buzz about the coin, usually through forums, social media as well as influential endorsements. The excitement is attracting investors in the short term who are afraid of losing out on the next major event.
When these investors flood the market, thereby increasing the value of the cryptocurrency whales are able to sell their investments at the profit. This sudden increase in value leaves investors who are short in the dark and their investment now valued at a fraction of what they were paying for. The whales have exploited the emotion that are driven by greed as well as FOMO to make money at the expense of other investors.
Example of Dogecoin
A renowned and well-known examples of a pump & dump scheme was the astronomical growth of Dogecoin during the early 2021. Numerous endorsements and tweets from prominent figures such as Elon Musk and extensive media coverage led to a huge crowd of investors. However, when the hype was at its height, whales began selling their Dogecoin holdings and the price began to fall, leaving investors with significant losses.
Crypto Whales and Social Media
Social media platforms such as Twitter and Reddit have a significant role to play for the market of cryptocurrency. They provide investors with a forum to talk about their favourite cryptocurrency and share their information. Whales profit from this by sharing false news, bullish sentiments or misleading information to alter sentiment.
Through creating a story of future price increases or exciting developments, whales could create FOMO in short-term investors. They then purchase the cryptocurrency hoping to profit from the expected profits. However, when the price is at some point when whales stop buying, they sell off and the price will decrease, leaving others with declining assets.
In the last quarter of 2020, U.S. Securities and Exchange Commission (SEC) issued an action against Ripple Labs which operates behind the crypto XRP. This led to a major decrease in XRP’s value however, an unidentified Twitter account that claimed to be representing the SEC posted false details about the settlement. The fake tweets led to an ephemeral spike in XRP’s price, enticed short-term investors to invest in. After the truth was revealed the price of XRP dropped which caused losses for the investors who fell for the deceit.
Crypto Whales: Influencer Endorsements of Influencers
The personalities and influencers of the crypto world are often popular with their followers and their endorsements may have a significant impact on the market’s sentiment. Whales often work with influencers in order to promote specific cryptos, creating a sense of FOMO among their followers.
In the same way, investors with short-term goals are attracted to markets by the promise of fast gains, only to watch the market fall when the whale in the background decides to make a profit.
BitConnect was a platform for cryptocurrency that promised astronomical returns through trading and lending. It became famous thanks to endorsements by prominent YouTubers and influencers, who portrayed the platform as a sure method of earning money. Many investors put their money into BitConnect and the platform ended up failing, resulting in huge losses for those who were attracted with the endorsements.
The world of cryptocurrency is brimming with risk and opportunity and the game of sentiments played out by whales is among the most risky aspects of this market. Short-term investors should exercise vigilance do their research thoroughly, and be skeptical of hype-driven claims. Although some whales aren’t involved in manipulative techniques but it is important that investors are aware as well as the possibility of manipulating markets.
To be successful in the crypto market, investors need to concentrate on long-term strategies fundamental analysis and risk management, rather than giving into the whims of FOMO. Only by knowing the strategies used by whales and staying alert can they navigate this volatile environment effectively.