What are crypto whale trackers and how do they work?

 

What are crypto whales?

Most cryptocurrencies have a number of large holders of the asset who can affect the value of the crypto asset. For energetic buyers and crypto traders, it helps to grasp the market behaviors of those whales.

Crypto whales refer to large holders of cryptocurrencies. They are often people or organizations who typically own more than 10% of crypto. As an example, MicroStrategy owns nearly 130,000 Bitcoin (BTC) and can move the value of BTC by their market participation. Due to this fact, tracking the action of crypto whales provides timely insights into the price movement of a crypto asset.

This isn't only a crypto phenomenon. In traditional markets, when a big player like Warren Buffett, a model or a hedge fund reveals that they've taken a place in a selected asset, the value of the asset rallies or vice-versa. That said, when these players promote an asset, the market typically follows.

With cryptocurrencies and nonfungible tokens (NFTs), all transactions are on-chain. Thanks to the transparency that blockchain offers, transactions performed by wallets held by whales will be noticed by the size of the crypto positions they maintain. These wallets will be tracked to then understand how the broader market could behave.

What's crypto whale monitoring?

There are devoted options to track the actions of crypto whales. These options can provide analytics on whale actions and, in some cases, can also make funding/trading decisions for the user.

Crypto traders and investors consistently track the amount of cryptocurrencies going out and in of exchanges. When a cryptocurrency like Bitcoin or Ether (ETH) is moved in large quantities into an exchange, it's anticipated to see some sell action leading to a fall in price. Conversely, if cryptocurrencies flow out of exchanges into wallets, it's considered a precursor to a rise in value.

It's because when exchanges have a high net outflow of cryptocurrencies, they've reduced supply leading to an increase in value. Oftentimes, a whale could buy cryptocurrencies on an exchange and transfer them into their wallets in large volumes. This might lead to a bullish price action for the crypto.

In some eventualities, whales may choose not to disturb the markets by buying or selling on an exchange. They'd do an over the counter (OTC) transaction between two wallets. As an example, they could send Bitcoin to a wallet that can send USD Coin (USDC) back, leading to a sale of BTC without the market spotting the transaction.

When the blockchain data a big transaction, buyers can research the transaction and decide up the wallets concerned in it. If the wallets maintain giant cryptocurrency positions, they are often labeled as crypto whale wallets. From then on, a daily check on these wallets and the transactions which can be carried out will be insightful in assessing value actions of the crypto held within the wallet. 

Whale monitoring will be equally helpful in the NFT markets too. Most NFT communities have large holders of the collection. In lots of cases, these NFT holders are identified by the community. Monitoring the habits of wallets of those whales can assist buyers make fast buy/sell decisions.

As an example, if a well-known NFT collector or a whale sweeps the floor of a nonfungible token collection, that may point out excessive convictions. Followers of the NFT collection and the whale would discover that and buy the nonfungible tokens. This behavior was seen with Gary Vaynerchuk several times during the NFT bull market in 2021.

Nonetheless, it may be overwhelming and time–consuming to manually stay on top of whale action, even when it's only for one cryptocurrency or NFT collection. That is where whale monitoring tools come into play.

What are crypto whale tracking tools used for?

Thanks to whale monitoring tools, investors are in a position to determine wallets that whales own and monitor them for buy and sell action because of the transparency that blockchain affords. Using monitoring tools helps with the automation of the monitoring process. 

Most crypto buyers own more than one cryptocurrency in their portfolio. In order to be informed of market actions, they might want to determine and monitor a number of wallets that maintain giant volumes of the cryptocurrencies they're interested in. On-chain analytics tools offer this functionality. 

Monitoring instruments scan through a blockchain, and when a transaction will get dedicated by a whale wallet, spot them in actual time and notify the consumer. These tools can even help determine transactions that are over a selected dimension, thereby permitting customers to conduct discovery of the whales inside that crypto ecosystem.

On a similar note, NFT collections will be tracked for actions just like the listing of new nonfungible tokens below floor price, sale of NFTs at bid value, floor sweeps and others. The floor price of a nonfungible token collection is the minimum value at which an NFT will be bought. Often, when the market appetite for an NFT collection is poor, the floor price comes down.

The fall in floor prices typically begins with one holder of the NFT listing it below the floor price. Due to this fact, whale monitoring tools can be utilized to identify such behaviors in order that an investor is made aware and act accordingly. 

Flooring sweep, however, signifies high demand for an NFT collection. This refers to the action when someone buys many nonfungible tokens in a collection that are listed on the ground value. Whale monitoring instruments can spot when a whale’s wallet sweeps the flooring of a new collection. This may alert NFT buyers, who can then begin monitoring the new collection.