Cryptocurrencies have different dynamics, mechanisms, and characteristics than the traditional monetary system. However, deep down, we all know that change in the market valuation of cryptocurrency we are holding affects us to an exceeding extent. It is because cryptocurrencies whales govern digital currency’s price up to their full potential.
Whales try to run the market according to them, to account for manipulation in the cryptocurrency marketplace by a considerable amount; these whales try to create some buy and cell walls. To know the mechanism and dynamics of cryptocurrency trading in detail, Check out Bitcoin Era Platform. Buy and sell walls help the bitcoin whales to governor impact the market valuation of the digital currency they are holding. Let’s understand why the most famous virtual coin has bought and sell walls.
What are whales?
The whale is a very famous term in the cryptocurrency industry. Every individual active in this industry is familiar with the term whale as they can change the market valuation of a cryptocurrency overnight, just with a few actions.
Whales are vulnerable when it comes to cryptocurrency marketplace volatility. Whales have contributed to an incline in this market’s volatility without moving a penny from their holdings. If whales decide not to move their cryptocurrency holdings for years, it diminutions the fluidity of that token.
Liquidity is the key to maintaining stability when it comes to any asset, and when this liquidity starts to decrease, the price becomes more and more volatile. As a result, whales are not healthy for this marketplace as it destroys the portfolio of retail investors.
In case bitcoin whales burn even half of their tokens, the value of bitcoin will skyrocket in just a few days. So far, the people holding the most significant number of bitcoin units are Satoshi Nakamoto, Tim draper, etc. Satoshi is speculated to hold almost 4.5% of entire BTCs, as reports he holds almost a million BTCs. Tim Draper, an entrepreneur who has invested in companies and cryptocurrency exchanges like Coinbase, is also a bitcoin whale. Unfortunately, after, Mt. Gox scam, he lost almost his entire cryptocurrency holding.
Later after the Silk Road case, he decided to purchase 30 K bitcoins from the auction hosted by government authorities. Recently, one prominent bitcoin whale became highly active in the industry and actively traded bitcoin with other digital currencies. After selling some of his bitcoins, the value of bitcoin decreased, and he bought added more bitcoins worth $137 million in his cryptocurrency wallet.
What are buy and sell walls?
The nation of these two walls is entirely reliant on the mechanism through most of the altcoins transactions are expedited. The majority of cases process the transactions with the help of an order book. In the order book system, buyers pitch the buying price they want to purchase a coin.
For example, the market value of ether is $3500, and you want to buy either at $3400; you can pitch your order on the exchange, and your order will place once the price of ether reaches $3400 you can buy ether at that price from any seller.
In short, whales are the entities that create buy walls and sell walls. Many tokens have crashed in the past few years after the actions of these whales. So alongside affecting the market value of that token, whales also impact other tokens.
A whale can easily prohibit you from buying ether at $3400 by placing a buying wall. For example, a bitcoin whale wants to stabilize the market value of ether at $3400; the whale will place an order for a considerable quantity of ether for $3400. Such actions block the price of a digital currency from declining.
As per the recent reports, these walls are not subjected to an individual trader or investor. For instance, a massive order of either buy or sell; most investors also try to place the order for a similar amount.
Trustable exchange generally doesn’t worry about these walls as none of the trustable exchanges has created buy and sell walls by themselves. Instead, cryptocurrency stakeholders and traders manipulate the market value of these digital currencies.
The above mentioned is everything you should know bitcoin buy and sell walls.