Investing in Bitcoin is popular, but also feared because of its large price fluctuations. More and more investors are trying to speculate on this. Whale spotting is the latest trend in Bitcoin investing and we explain it.
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Whale spotting in Bitcoin investing explained
We have been seeing more and more institutional investors investing in Bitcoin for some time now. Institutional investors are professional investors who often own large sums in BTC (or other crypto). Such large owners are called whales.
One of the advantages of whales is that they have extensive analysis software. Thus, this allows them to act rationally. Another advantage is that they invest according to strategies. This has two advantages:
By making a numerical analysis they switch off the emotion in investing;
Because they decide in advance at which prices they will enter and exit, they place their orders in advance. These can be viewed in the order books on large stock exchanges.
Bitcoin Investors are now increasingly coming up with the idea of spotting and mirroring the investment decisions of those whales. In doing so, they are thus investing with the trend and following the strategy of major players.
What should you look out for in Bitcoin whale trading?
First of all, of course, it is important to make sure you find a whale that gets maximum returns in Bitcoin investing. An example is this Binance whale who has been buying and selling at the right times for weeks in a row.
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This binance whale has marked every local top/bottom for the last two weeks. Been watching him come and go. Accumulating at the lows, capping price at the highs. Most recently filled 2,000 BTC (60 million) at the local lows at 29.2k before this pump we are seeing now. $BTC pic.twitter.com/STzfAxHXsN
– CrediBULL Crypto (@CredibleCrypto) June 7, 2022
In addition, in whale trading, it is important that you get a complete picture of the whales’ transactions. This is because they can trade on various exchanges and also do various transactions.
The site whalemap.io offers the opportunity to view (currently) all kinds of on-chain statistics about Bitcoin whales and hodlers for free. They also share regular analysis on their Twitter channel.
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$31,600 is key pic.twitter.com/iB1hCqz0EP
– whalemap (@whale_map) June 8, 2022
So in this way, you can also do whale tracking by studying all the whales at once instead of following a few whales.
So by combining the data, if you want to invest in the short term, you can combine your buying and selling with the actions that whales take.
What are the objections to BTC whale tracking?
Of course, no investment strategy is foolproof. Therefore, there are also risks associated with whale tracking as an investment strategy. We list 3 of them:
These analyses do not take into account fundamental factors that can affect the price of Bitcoin.
So-called “black swan” events (sudden bad news) can cause the whales to adjust their strategy.
For these large investors, investing in BTC is often part of a more comprehensive asset management strategy. As a result, they may make transactions that do not make sense when you analyze BTC, but do fit into the whale’s investment strategy. For example, you can think of a situation where the BTC market is bullish, but a large whale still decides to sell because they have regulatory issues in their country or decided to make their strategy more risk averse by investing mainly in gold.
How can you invest with Bitcoin whale tracking?
We already saw that in addition to tracking individual whales, there is also the possibility of tracking whales as a whole through a website. In addition, of course, it is always important to do your own research and make your own rational investment decisions.
If you decide to try Bitcoin whale tracking you can use a cryptobot and record various (sell) prices in it. This way you can capitalize on market movements while not having to sit behind a PC 24 hours a day. Our colleagues at Tradeincrypto.com will be happy to explain more about BTC and crypto trading with cryptobots.
Source for this article: Cointelegraph.com
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