Crypto Academy / Season 3 / Week 1 - Homework Post for Prof. @wahyunahrul
Hello Everyone,
Hope you are all fine? I want to use this opportunity to congratulate the new proffesors especially Prof. @wahyunahrul for his appointment as a steemit Professor. We really look forward working with you Prof. and am happy to be one of the participants of this class lecture.
I really enjoy the class topic by Prof. @wahyunahrul is Whale - The Driver of Cryptocurrency value. As it as been discussed in the class by Professor, whales, the driver of cryptocurrency is known in crypto world as investors with a large investment. The whales in crypto world can make a change in the market either positively or negatively. Whale investor can make a change positively in the market when they buy a particular cryptocurrency with a large amount of money, that help the particular cryptocurrency to have more value and they make change negatively when they sell the purchased cryto, it makes it to reduce value.
Whale investor are mostly riders of the small investors because when they invest is like setting a trap for the small investor because the price will suddenly shot up, it will look atractive for those that does not understand the system of the market and anyone that fall into the trap will be a victim of the trap. That is why it is always good to make your research and study the market very well before concluding to buy any assest in order to avoid falling into the trap of the crypto whales and to be able to also know the right time to enter the market to avoid loss. Small investor can use their knowledge of technical analysis and Fundamental analysis to take advantage of large investor in order to make more profit.
Under the lecture of Prof. @wahyunahrul I have some questions to answer. Please, join me as I start.
Based on the understanding that you've gained from this class, explain why whales are so feared by small investors?
Firstly, what do we understand by Cryto Whales? Cryptocurrency whales is an individual with a large amounts of a particular cryptocurrency. As the individual as a large amount, the investor becomes powerful to manipulate the particular cryto currency value.
However, Crypto whales mostly cause price volatility in the market of the coin they own. They invest in the market to attract more buyer for them to make more profit and they normally put a massive sell order on the books when they are ready to sell because they know it will drop once they place an order.
Crypto whales normally place a price that is lower than all other sell order in the market, which will increase the volatility in the market because the price will fall and there would be panic chain reaction. The price can only stabilize only if the large sell order as been filled after when they have created enough panic. They always have power In the market more than the small investor because they have the power to manipulate and accumulate more coins at their desires price point.
Reasons why whales are feared by small investor.
There are some reasons in which small investor always afraid or panic when they are in the market with crypto whales or when they want to enter the market. Below are the reasons.
- Power to Manipulate -
Crypto whales are investor that own large amount of a particular cryptocurrency. With the large amount of crypto, they can manipulate the market through buying and selling. When they buy more crypto with large amount, it increase the value of the particular crypto owned by the whale. Also, if crypto whales place an order to sell it, decrease the amount of the crypto. The large amount of the crypto shares give them the power and oppurtunity to manipulate the shares.
- Price Volatility -
Price Vitality is refers to the price fluctuation of Crypto in the market. Volatility is measured by the day-to-day percentage difference in the price of the commodity.
Small investor always fear crypto whales in this section because it is very risky. They buy and sell cryptocurrency. When crypto whales purchase coin, they purchase a very large volume that will make the particular coin to be scares and that will make the price to really go higher. This period is called Bullish period because of the increase.
Also, Crypto Whales can decide to sell their cryto after when they have meet up their target price point. Compared to the small investor who wait for increasement of price in the market before selling. When crypto whales sell, the price will decrease in a very sharp way. This period is known as Bearish period. It is always profitable for whale investor but it can also be profitable for small investor if they purchase or enter market at the right time.
However, It is always profitable for small investors that are already in the market before crypto whales purchase their own assest but if they did not sell before whale sell and take profit, it can reduce back to it formal price, even below. Because the panic will be much that investors will leave the market in order to avoid loss of profit and capital.
Will we be able to take advantages of the existence of the whale that is so feared?
Crypto whales action can scare small investor but we can still make a good advantage of their existence in the cryto world. Their existence can be fearful but can still also be profitable at the same time, all what we the small investor needs to do is to study their existence in the market.
Small investor can study the existence of crypto whale investor in the cryto world by studing the market. In the market their is always a clear understanding once it is bull and bear period in the market through the caandle stick. Red shows the bear period while Green shows the bull period. But it is always advisable for investor or traders to always carry out their Technical and fundamental research analysis before concluding on buying or purchasing any coins.
Find an example of a whale's cycle on a cryptocurrency chart, and do a detailed analysis of the phases in the cryptocurrency chart (don't take the cryptocurrencies that are ranked in the top 10 as examples). (Screenshot Required)
CoinMarketCap
The image above is the Latest Top 10 Cryptocurrency.
I will be choosing Bitcoin Cash for my assignment. I will be giving detailed analysis on the cryptocurrency coin. No one know when the whales purchase their coin but we can still predict by checking the particular crypto chart as you can see below.
The is chart above BCH/USDT Tradingview. It show how the market start and end in every 4hours. Each candlestick represent the value of the WAVES coin for 4 hours. The coin was issued on June 24 in the year 2017. It is presently raked No 12 in Binance. The explaination of the chart above will be explained below.
Accumulation Phase
[Binance](https://www.binance.com/en
This is the stage where cryto whales buy or accumulate coin in their wallet with a low volume. In this stage the price of the coin is not stable to buy or to sell and the price or value of the Crypto is trending to be flat. When we see this we should that the crypto whales are accumulating coin in order to invest large which will benefit the small investor.
Uptrending Phase
After when the whale as accumulated the coin the first phase, they will begin to enter the second phase called uptrend phase which can also be called absorption phase. The phase is where whales purchase their coin in large volume in other to attract the other investor in order to accumulate profit. While sometimes it may happen that some investor will start selling especially for those that as been waiting for an increase the fear of losing will make them to sell.
Distribution Phase
At the phase which is distribution phase is when whales start taking their profit slowly because they don't want to discourage the other investor from leaving the market. So, they take it slowly in other to still make their profit very high. If we can see the above chart, there is still resistance to whales where there are still many investor intending to purchase. They take it slowly in order still make the price high.
Downtrend Phase
This phase occur when the small investor start to realise that the whales as almost sold their whole profit. This will make the small investor to be leaving the market in order to see some profit. The phase is called Bearish.
If you are a “Whale”, what cryptocurrency would you choose to invest or trade (except those that are in the top 10), explain why you chose that cryptocurrency.
As a whale I would like to invest in Dogecoin. I would like and even enjoy in Dogecoin because it has many possibility of rising in the future. It is a bitcoin clone that was issued in the year 2013. Dogecoin is a coin that was created as a joke.
Dogecoin is loved by many, it has the backing of Elon Musk. Elon Musk is an investor known by many. He as really helped Dogecoin in it value increasement because he a celebrity that has many fellower on social media and anything he says on social media always have an effect on the particular assest or coin. Dogecoin has lots of celebrity endorsements.
Also, Dogecoin developer team are very active. They is nothing like having a community with an active leader. Active leaders bring about the development of the community. I.e. a good developer can determine how the future is going to be, because they can do improvements that will make the cryptocurrency more adaptable to the changing market needs.
Do a kind of analysis as a whale with the phases that I explained earlier on the chart of your chosen cryptocurrency, show where you will start buying the cryptocurrency, and explain how you will take profit. (Screenshot Required)
I will be analysing dogecoin as a whale using the above diagram. I will be explaining each phase.
Accumulation phase
This phase is where I accumulate my Dogecoin in a low value. In this stage the price of Dogecoin is not stable to either buy or sell. This phase shows as a signal to purchase because investor buy in this phase in order the accumulate and prepare for the next phase.
Uptrend Phase
At this stage as a whale, I would start to purchasing largely in other to attract the other investor to come on board for me to take my profit. In this phase investor purchase largely to keep attracting other investors and also to get to my desired price point. This phase is known as Bullish because of the value increasement.
Distribution phase
Here, I would like to start taking my profit. I would start taking it slowly in order not to discourage the other investor or know that the whale is leaving. So, I would take slowly.
Downtrend Phase
At this phase, there would be downtrend and is what they call bear that occur in the market. It is the stage where small investor start descovering that the whale as almost sold all their profit. So, they will start leaving with a sharp trend.
In conclusion, Small investors can take advantange of the crypto drivers by taking there time to study the market using technical and fundamental analysis. It can be of benefit to small investor while it can also be a trap for them. I want to say a very big thank to Prof. @wahyunahrul for this wonderful topic. I read and understood. Also to those that will be reading my post,