There are dedicated solutions for tracking the actions of crypto whales. These solutions can provide analytics on whale stocks and in some cases can also make investment/trading decisions for the user.
Crypto traders and investors constantly track the amount of cryptocurrencies entering and leaving Exchanges. When a cryptocurrency like Bitcoin or Ether (ETH) is transferred in large quantities in an exchange, it is expected that there will be a selling action leading to lower prices. Conversely, if cryptocurrencies exit exchanges in wallets, they are seen as a precursor to rising prices.
This is because when exchanges have a high net outflow of cryptocurrencies, they have reduced the supply, which has caused prices to rise. Often a whale can buy cryptocurrencies on an exchange and move them into their wallet in large volumes. This could lead to bullish crypto price action.
In some scenarios, whales may choose not to disrupt markets by buying or selling on an exchange. They would make a over the counter (OTC) transaction between two wallets. For example, they can send Bitcoin to a wallet that will send USD Coin (USDC) return, resulting in a sale of BTC without the market spotting the transaction.
When the blockchain records a large transaction, investors can study the transaction and retrieve the wallets involved. If the wallets hold large cryptocurrency positions, they can be labeled as crypto whale wallets. Therefore, regular monitoring of these wallets and the transactions made can be useful to assess the price movements of the crypto held in the wallet.
Whale tracking can be just as beneficial in the NFT Markets too. Most NFT communities have large collection holders. In many cases, these NFT holders are identified by the community. Tracking the behavior of these whales’ portfolios can help investors make quick buy/sell decisions.
For example, if a famous NFT collector or a whale sweeps the floor of a collection of non-fungible tokens, it may indicate high convictions. Followers of the NFT collection and the whale would notice this and buy the non-fungible tokens. This behavior was noticed with Gary Vaynerchuk several times during the NFT bull market in 2021.
However, it can be overwhelming and time-consuming to manually stay on top of whale action, even when it’s just a single cryptocurrency or NFT collection. This is where whale tracking tools come in.