A Brief Overview of Crypto Whale, Bull, and Bear

November 16, 2022

Crypto World

Amrit Korpal

As with any industry, the crypto field has been famous for its own set of terms. These often include… Animals. It might be difficult for a crypto newbie to understand the market without understanding the rich crypto ‘zoo’ it’s collected. For instance, what is a crypto whale? What is a bull run? What is a crypto bear market? All these unusual terms need some explaining. Let’s take a look at the most popular animal terms in the cryptocurrency market industry: crypto whale, bull, and bear.

What Is a Crypto Whale?

The term ‘crypto whale’ is actually quite simple to understand. Some people own huge amounts of crypto, and they are called crypto whales. Achieving whale status in the cryptocurrency space is subjective. In most cases, the community seems to agree that a large percentage of the available coins make an account a whale. In general, whales seem to account for more than 10% of the total number of a specific cryptocurrency. These individuals can single-handedly move the market by buying the equivalent of the Bitcoin that thousands or millions of people can buy, thus manipulating the price. Generally, whales hold enough cryptocurrency that they have the potential to cause ripples on the surface. 

To be considered a Bitcoin whale, a person or an entity would need to own 1,000 Bitcoins or more. According to BitInfoCharts, four bitcoin wallets owned 3.49% of all the BTC in circulation in May 2022, and the top 100 wallets held around 15.36% of all BTC. As a rule, large crypto accounts are closely monitored by the crypto community and investors. 

Whales can create price volatility increases, especially when they move a large quantity of cryptocurrency in one transaction. If an owner is trying to sell their Bitcoin for fiat currency, the lack of liquidity and large transaction size creates downward pressure on Bitcoin’s price because other market participants see the transaction. When whales sell, other investors go on high alert, watching for indicators that whales are getting rid of their holdings.

Crypto Sharks: Another Fish in the Ocean

The ocean has a number of large fish or mammals. While whales are undoubtedly huge animals in the crypto waters, sharks are smaller in size. As a rule, the term ‘crypto sharks’ refers to investors that have over 500 BTC in their accounts.

Whales and sharks can be a problem for cryptocurrency because of the concentration of wealth, particularly if it sits unmoved in an account. Without coins being actively used, this wallet lowers that specific cryptocurrency’s liquidity because there are fewer coins available. Examples? Well, Elon Musk, the South African entrepreneur, reportedly bought $1.5 billion worth of Bitcoin. If it’s true, then Musk can be seen as a Bitcoin whale. In any case, he’s certainly a Dogecoin whale.

The reason why a crypto whale or shark would want to buy Bitcoin is the same for all individuals, groups, or institutions. It is to store the value of their money using Bitcoin as a deflationary element. The traditional fiat is prone to inflation which means it can lose its value over time. However, Bitcoin gains value over time because it has a limited circulation. The second important reason why whales and sharks buy Bitcoin is to make their money yield a huge return within a short period.

Whales and sharks can manipulate the moods, so traders have to be aware of them to know when to enter the market and when to get off it. These large investors can dump a particular coin, so it’s better to stay informed about the market tendencies.

Crypto Whales and Sharks: Examples

Except for the above mentioned Elon Musk, crypto whales and sharks may include the following personas: Satoshi Nakamoto, the Winklevoss Twins, Barry Silbert, etc. There is also what we call institutional money, where institutions like hedge funds or pension funds invest their money on behalf of their clients and make the money grow and yield returns. The largest crypto holders may include Pantera Capital, Tesla, Bitcoin Reserve, among others.

The entry of a whale or shark often increases the adoption of a particular coin. For example, a few days after it was made public that Elon Musk had bought Bitcoin, its price increased by 20%, which indicated that many people decided to invest in the world’s first crypto.

Bulls and Crypto Bull Runs

A bull market, or bull run, is defined as a period of time where the majority of investors are buying, demand outweighs supply, market confidence is at a high, and prices are rising. If in a given market, you see prices quickly trending upwards, this could be a sign that the majority of investors are becoming optimistic or ‘bullish’ about the price increasing further, and may mean that you’re looking at the start of a bull market.

Investors who believe that prices will increase over time are known as ‘bulls.’  As investor confidence rises, a positive feedback loop emerges, which tends to draw in further investment, causing prices to continue to rise. Even during a bull market there will be fluctuations, dips, and corrections along the way. It can be easy to misinterpret short-term downward movements as the end of a bull market. This is why it’s important to consider any potential signs for a trend reversal from a broader perspective, looking at price action over longer time frames. Investors with a shorter time-frame often talk about ‘buying the dip.’

The latest bull run for crypto was in 2021. It’s been a year since we saw bulls move in on the market, but since then the moods have become… Bearish.

What Is a Bear Market in Crypto?

A sharp downwards price movement can begin a bear market, where more and more investors believe prices will continue to fall, causing a downward spiral as they sell in order to prevent further losses. Bear markets are defined as a period of time where supply is greater than demand, confidence is low, and prices are falling. Pessimistic investors who believe prices will continue to fall are referred to as ‘bears.’ Bear markets can be difficult to trade in, particularly for inexperienced traders.

It’s very difficult to predict when the bear market might end, especially in crypto, and when the bottom price has been reached. Rebounding is usually a slow and unpredictable process that can be influenced by many external factors such as economic growth, investor psychology, and news, good or bad. For instance, the recent meltdown of Celsius and FTX collapse have added to the overall crypto recession, dropping Bitcoin prices even lower. The harsh period began even earlier and was worsened in May 2022, with the collapse of the Terra and LUNA project.

However, a bear market can also present opportunities. After all, if a trader’s investment strategy is longer-term, buying during a bear market can pay off when the cycle reverses itself. Investors with shorter-term strategies can also be on the lookout for temporary price spikes or corrections. And for more advanced investors, there are strategies like short selling, which is a way of betting that an asset will decline in price.  

It’s unclear where the terms ‘bulls’ and ‘bears’ come from, but most people believe they derive from the way each animal attacks. Bulls thrust their horns upward, while bears swipe downwards with their claws. 

When Is the Next Crypto Bull Run?

The previous crypto bull run was driven by stimulus packages, along with NFT and metaverse development. Future drivers may include institutional adoption, non-gated payment methods, and Web3 development. Covering such a diverse range of subject areas, Web3 development might have the capacity to pull in new participants who are not otherwise interested in cryptocurrencies. A lot in this field has not yet been discovered or remains largely vague due to the ongoing crypto winter.

Moreover, getting integrated into the world of crypto for a so-called average Joe could be really difficult. If fintech companies start to integrate crypto transfers into their offerings and make it easier for users to put their funds to work on the blockchain, crypto could see a new wave of adoption. The more crypto infrastructure gets developed, the more this field will thrive.

Impact of Bitcoin Halving on Bullish Trend

Additionally, the expected Bitcoin halving may strongly influence the bullish trends. Coincidence or not, a new bull rally has historically commenced shortly after the Bitcoin protocol halves its mining rewards every 210,000 blocks. This catalyst has predicted every major bull run since the first Bitcoin halving in late 2012 and is believed to constantly influence the price of Bitcoin and other cryptocurrencies.

The most likely explanation for the halving rallies that have taken place roughly every four years is simple supply reduction. Some experts are already saying that no major bull runs can be expected until April 2024 or at the very least, until the end of 2023. This is also partially influenced by the economic problems the world faces and the general wariness of traditional investors.

This is our first article on animals in the crypto industry. Keep reading StealthEX blog to stay in touch with the latest news from the crypto market and its specific terms.

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