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The cryptocurrency sector, similar to other environments, features numerous slang terms that are frequently utilized, even in formal documents. One such term is one that anyone with an interest in digital assets or trading has likely encountered. It is the term “whale.”
A crypto whale, or simply a whale, refers to a significant holder of an asset. This terminology is employed by the media, financial analysts, and everyday users. The term BTC whales was first introduced in 2013 by cryptocurrency trader Vinny Lingham, who borrowed it from stock market traders who had used it in the previous century.
Whales arguably exert the most considerable influence on the cryptocurrency market. Much like their oceanic counterparts, which can generate substantial waves due to their considerable size, BTC whales possess a large quantity of digital assets and can readily affect the prices of specific coins through their transactions. Whales are frequently involved in market manipulations, such as Pump and Dump schemes.
Categories of Whales & Their Bitcoin Holdings
In early 2021, when the cryptocurrency market peaked, analysts from Glassnode expanded the classification of BTC investors, categorizing them into eight types of “marine species.” In addition to whales, they also identified humpback whales. The primary distinction between these investor categories lies in the quantity of digital assets held in their accounts. Regular whales hold between 1,000 and 5,000 BTC, while humpback whales possess more than 5,000 BTC. However, this classification did not gain widespread acceptance, and all holders of over 1,000 BTC continue to be referred to simply as “whales.”
Despite Bitcoin’s decentralized characteristics, an analysis of BTC addresses reveals that whales control the largest share of tokens. For example, a study by Glassnode last year indicated that whales possess approximately 31% of the total BTC supply. As reported by BitInfoCharts, 2,039 whales held over 1,000 BTC as of December 9, 2022, which constitutes nearly 40% of the total issuance. Notably, five addresses hold between 100,000 and 1 million BTC.
Bitcoin’s “Marine Life”
In addition to whales, the crypto “sea” is populated by smaller entities. Their slang designations have not gained significant traction within the community, yet they remain in use on forums and by certain experts.
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Based on the quantity of BTC in their accounts, the “marine life” of the crypto ecosystem is categorized into the following types:
- Sharks — 500-1,000 BTC.
- Dolphins — 100-500 BTC.
- Fishes — 50-100 BTC.
- Octopuses — 10-50 BTC.
- Crabs — 1-10 BTC.
- Shrimps — <1 BTC.
The initial classification overlooked plankton, which later found its way into this taxonomy. Plankton refers to BTC addresses with balances of less than 0.01 BTC. These addresses hold just over 0.22% of all BTC in circulation, yet they represent 74% of all addresses within the Bitcoin network.
The market actions of plankton, shrimps, and crabs can significantly influence cryptocurrency prices, as the total number of such investors constitutes 99.65% of all BTC addresses in the network. According to BitInfoCharts, the number of addresses holding less than 10 BTC exceeds 43.3 million. Collectively, they own over 17% of Bitcoin’s total supply, which is why their activities can have a substantial impact on Bitcoin’s price.
For instance, rumors circulating within the community regarding Tesla’s potential major BTC sale in May 2021 led to a 20% decline in Bitcoin’s price. This was primarily due to retail investors reacting to the FUD effect and beginning to sell their BTC actively. Ultimately, Tesla CEO Elon Musk refuted the rumors, but Bitcoin struggled to regain its previous level for an extended period following this incident.
Whales & BTC’s “Ecosystem”
The actions of whales significantly affect market dynamics, as smaller investors often look to them for guidance. Occasionally, a scenario arises where whales release substantial amounts of BTC into the market. This prompts shrimps to begin selling off their holdings. Such actions increase the pressure on the asset’s price, resulting in a decline in quotes. Subsequently, whales may purchase the coins at a reduced price, facilitating the transfer of assets from smaller holders to whale addresses. Conversely, when whales accumulate BTC and transfer it to cold wallets, smaller participants in the “crypto sea” tend to follow suit.
In this context, 2022 proved to be a challenging yet revealing year. A FUD attack on Terra initiated by whales led to a decline in the first cryptocurrency’s value and a widespread sell-off of assets by shrimps and plankton, further exacerbating the drop in BTC’s price. The second significant event that year was the collapse of FTX. However, this time, smaller BTC holders opted not to sell their assets but instead shifted to accumulation, mirroring the behavior of larger investors. As a result, the total balance of Bitcoin addresses held by plankton and shrimps increased to a record 6.3% of the total supply.
Thus, smaller holders provide whales with the flexibility to maneuver, while whales direct and adjust market trends. Just as in the depths of the ocean, the “crypto sea” relies on both smaller and larger life forms. Therefore, plankton and shrimps are essential components of the BTC “ecosystem.”
