With the continuous support from Tesla founder Elon Musk, endorsing the crypto meme since February 2021, cryptocurrency Dogecoin's value has been boosted. The current value of joke coin, having the image of a Shiba Inu dog is currently $0.339764, according to coindesk.com.
The crypto trading website even says that the crypto Dogecoin's market capitalisation is about $43.96 billion. Created by Jackson Palmer and Billy Markus in 2013, the joke coin entered market to satirize the growth of altcoins by making the doge internet meme into a cryptocurrency.
Like most of the cryptocurrencies, Dogecoin is also marred with ‘whales’, which is few people holding the majority of the coins.
So what is do ‘whales’ mean in cryptoworld?
Individuals who hold large amounts of coins of a certain cryptocurrency are known as whales in cryptoworld. As they hold large amounts of coins, they become powerful enough to manipulate the valuation of the said cryptocurrency.
This often results in price volatility, which happened with cryptocurrency Bitcoin few days ago. Looking at the Dogecoin ‘whale’ account, the person holds nearly $12 billion (around Rs 8,752 crore) worth of the meme currency. The whale’s account's holdings is intact, despite the recent drop in the value.
How do whales manipulate Crypto?
Whales, normally, put a massive sell order on the books that is lower than all of the other sell orders in the market. This adds volatility in the market, following the prices fall and panic chain reaction.
This will only stablise when the whale would pull their large sell orders off of the market when they’ve created enough panic. So, now the price is where the whales wanted it to be with which they can accumulate more coins at their desired price point. The following tactic is known as a “sell wall.”
One more tactic used by 'whales' is doing things which are 'the opposite of a sell wall'. This is done o artificially inflate the price of a cryptocurrency. In this tactic, 'whales' put huge buy orders on the market at higher prices than what is on the market, which forces bidders to raise the price of their bids so the sell orders fill their buy orders.
The tactic can lead to 'Fear of Missing Out' among the smaller investors if executed correctly. However, this tactic needs significant amounts of capital that aren’t required to pull off a sell wall successfully.
Though these tactics are illegal in the regulated stock market exchanges, with loopholes in crypto trading world, these tactics are still working and the whales are sometimes able to manipulate the market.
Case of Elon Musk:
Musk bought Dogecoin on February 6, 2019 when its value was around $0.0018 (around Rs 0.13) a coin with the address DH5yaieqoZN36fDVciNyRueRGvGLR3mr7L, according to data from Bitinfocharts. Currently, the same account now has 3,671 crore coins, around 28 percent of Dogecoin’s total supply. Prior to cryptocurrency’s downfall, Musk's account had $22 billion worth of Dogecoins.
On May 25, Musk asked his Twitter followers to submit ideas to “develop Doge” (cryptocurrency Dogecoin) on GitHub or the Dogecoin subreddit page on Reddit and tagged the Dogecoin developers account on the platform. Following this, the Bitcoin shot up to nearly $40,000-mark.
Similarly, Dogecoin rose by 3.06 percent in past 24 hours and was trading at $0.336977. Its m-cap reached $43.67 billion, according to Coindesk till the report was filed.
Is Musk the crypto 'Whale'?Despite recent incidents one cannot find out who this Dogecoin ‘whale’ is unless the person himself or herself decides to come out. However, speculations are rife that Musk is the Dogecoin ‘whale’.