New Metrics are Here! Behold Santiment's New "Dollar Amounts Held By Whales" Overall and Off Exchanges!

Tracking whale holdings and behaviors can be an invaluable methods for making accurate crypto market predictions on Santiment. But what exactly are whale holdings, and why should all levels of traders pay attention to them? Let's break it down.

Why Do Whales Matter For Price Prediction?

In the simplest terms, whales in the crypto world are wallets, typically held by individuals or organizations, that hold a significant amount of a particular coin, and can "move markets" through their transactions.

These holdings are significant enough to typically influence the market if these wallets so choose to start some domino effects that cause traders to either FOMO in or panic sell.

So What are the New Metrics?

To make it easier to track these influential players, Santiment is proud to debut arguably two of the most important metrics we have ever released:

  • Whale USD Balance: The amount of coins held (converted into USD) by wallets considered to be in the "whale" tier for the project
  • Whale USD Balance Not on Exchanges: The amount of coins held (converted into USD) by wallets considered to be in the "whale" tier for the project AND are not on any known exchanges (mainly meaning they are held in self custody)
Ethereum's non-exchange whales (in purple) own an all-time high $44.5M after profit taking in 2022. They own $16.23M more in USD than they did one year ago.

What Do Whales Actually Indicate in Terms of Understanding Markets?

  1. Market Influence: Whales can move the market. When they buy or sell large amounts of a cryptocurrency, it can cause significant price fluctuations.
  2. Trend Prediction: Tracking whale activity can provide insights into market trends. If whales are accumulating a particular coin, it might signal a potential price increase. Conversely, if they are selling off, it might indicate a price drop.
  3. Market Stability: The behavior of whales can also indicate market stability. For example, whales moving assets off exchanges into private wallets might suggest they are holding for the long term, which could imply confidence in the asset's future value.

How Are Whales Defined?

To determine who qualifies as a whale, Santiment has established a method based on the market capitalization of the coin. The relationship between a coin's market cap and the threshold for whale status is not linear but logarithmic. This means as the market cap increases, the minimum balance required to be considered a whale also increases, but at a decreasing rate.

A wallet is considered a whale if it holds a minimum amount of a cryptocurrency that meets a certain threshold, which depends on the coin's market capitalization. For instance, for a cryptocurrency with a market cap of $100 billion, any wallet holding $6.9 million worth of that coin is classified as a whale.

Obviously, this implies that being a Bitcoin (#1 coin by market cap) whale (and having enough to move the price of the largest coin in crypto) takes way more capital than being a Polymesh (#178 coin by market cap).

You may also already know of Santiment's Supply Distribution tiers, where you can look at how many coins a tier group of coin holders has:

The problem is that coins may dramatically shift their values over time. So if you are relying on wallets with 10,000 or more ETH (currently $38M in holdings) being a whale now, remember that 10,000 ETH in 2017 was just $2.6M instead.

Wallets with 10,000+ ETH are holding 50.3% more coins than they were 7 years ago... but this doesn't tell us the whole story without converting to USD

So for these new USD-converted whale metrics, instead of arbitrarily just choosing what amount of "dollars held" qualifies a wallet to be a whale for every single asset, Santiment uses an objective methodology to base "whale tiers" solely by that the coin's overall market cap is itself. Looking at the chart below, you can see that we use a curve that flattens as the assets get larger and larger in market cap. This exponential way of applying the "whale" standardization makes much more sense than a linear method:

At the end of the day, there will always be those who think we've got this methodology exactly right... vs. those who think we should measure "what a whale is" much differently. But you can, at the very least, trust that a great deal of mathematical planning and objective decision making went into this. It is the usual way that we typically make decisions on how to offer new leading metrics to our community, and always is with the intention of avoiding any favoritism at all costs.

So with all of this said...

Can USD Holdings of Whales Be Deceiving Because of Moving Prices?

Yes. You absolutely will want to be aware that sometimes the amount of USD held by whales in a coin is going up simply because, well... the price of the coin is going up. The theory is that eventually whales want to profit take, and keep a $100M wallet worth close to $100M even if the coin has moved up +25%.

Over time, though, most assets that rise in price will seemingly show that the USD holdings by whales are going up as well. For this reason, you may find these whale metrics most useful when markets are flat, so that you can see the true behaviors of whales' profit takes and dumps when prices are on an even playing field for an extended period of time. So in the future, combining their USD holdings with a long-term trend line could be meaningful.

You can help us with analysis of methods like tracing a price trend vs. the trend of non-exchange USD holdings.

Fantom's non-exchange whale holders appear to have held fairly steady through the crazy volatility. Since March, 2022, their total USD holdings have only dropped -18% even though the price has dropped -71%. A promising sign? Yes, probably.

How Can We Actually Get Alpha From These Charts?

By monitoring these metrics, novice traders can gain insights into the market sentiment and potential future movements. For example, if there's a noticeable increase in the Whale USD Balance Not on Exchange for a particular coin, it might suggest that influential holders are confident in its future value, making it a potential buy signal.

Conversely, if whale holdings on exchanges are increasing, it could indicate that whales are preparing to sell, which might be a warning to exercise caution.

PEPE's total whale holdings took a huge plummet in early May. But the non-exchange whale holdings have actually continued climbing... and prices have followed!

Tracking whale holdings can be a powerful tool in any trader's arsenal. It provides a window into the actions of market movers and can help predict future price movements. By understanding and utilizing these metrics, traders can make more informed decisions and potentially improve their trading outcomes.

As a fair warning, we want to mention that these new metrics are only available for Ethereum and ERC-20 related projects. But based on your feedback, we can certainly look into adding these indicators for more blockchains soon.

Regardless, give these two metrics a whirl with this link, which also includes the tried and true Supply Distribution charts that have been part of Santiment for several years. Let us know what kind of uses and discoveries you make!


Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

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