A Mystery $1 Billion Bitcoin Whale Is Active - What Could It Mean to Prices?

Cue the theme song from "Jaws."

A mystery bitcoin whale wallet holding nearly $1 billion worth of bitcoin is suddenly active after lying dormant for more than four years, according to a recent post on Reddit. Does this mean the whale is intending to dump a huge amount of BTC in the market?

If you trade crypto you will hear the term "whale" and as the name suggests it is used to describe huge cryptocurrency holders. Bitcoin wallets holding around $1 billion are usually referred to as whales.

With the recent activity many investors are questioning whether a dump is on its way. Some of the transactions are being traced back to a wallet address that has previously been linked to both Silk Road and Mt. Gox. The question is what happens when a crypto whale is active? Who does this $1 billion whale wallet belong to? Should bitcoin investors expect a dump?

Whales are usually blamed for unexplained market phenomenon. As the crypto market has grown over the years and more investors have entered this means, bitcoin gained more liquidity and speculators believe bigger bitcoin whales are the ones who have the ability to shift the waters.

Rinse and Repeat Strategy

According to Bitcoin.com there are many trading maneuvers bitcoin whales will use to profit, like using a trading tactic commonly called the "rinse and repeat cycle." It is important to note that whales aren't just individuals but could also be organizations like a bitcoin investment fund as well.

Bitcoin.com on the rinse and repeat strategy :

"The rinse trade is used in many types of markets and can be effective if timed correctly and very profitable if you are a bitcoin whale. The trader with a lot of holdings starts selling bitcoins lower than the market rate which at times can cause a panic sell off by small-time traders. The trick is the whale sold just below the current market value and just enough to watch panic ensue. Then the whale waits and watches the panic selling take place until the bitcoin price reaches a new low. At this point, the whales quickly scoop up way more bitcoins than they first started with and after the 'rinse' they usually 'repeat' this type of trade often. People speculate that there are many ways whales can throw their 'BTC weight' around to either push the price up or down to accumulate more bitcoins."

Source: The Street

Picture: pixabay.com

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