Hello everyone, I feel so happy to be doing this homework, by Prof. @wahyunahrul . I want to say a big thank you to you Professor for a very well detail explanation. I think that your lecture was really wonderful and I really learned a lot from it.
My answers follow afterwards. Here are the questions you asked -
Based on the understanding that you've gained from this class, explain why whales are so feared by small investors?
Will we be able to take advantages of the existence of the whale that is so feared?
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)
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.
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)
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Question 1
Based on the understanding that you've gained from this class, explain why whales are so feared by small investors?
First, whales is someone or a group of people that have the financial power to move the market in whatever direction they please. Therefore, they control the value of a cryptocurrency.
They can decide to buy a particular cryptocurrency in large volumes, therefore moving the price up. And the chart or graph will start looking green. This is called a bullish market.
They're also capable of pushing the value of a cryptocurrency down. When they do this, the market turns red. And this called a bearish market.
The reason why small investors fear whales is that whales can do whatever they want with the cryptocurrency market. They have the control, and that's why small investors fear them.
Question 2
Will we be able to take advantages of the existence of the whale that is so feared?
Yes, we can be able to take advantage of whales. And we can do this by really becoming very well informed of how the markets function, and by studying the particular cryptocurrency you want to invest in.
Basically, what we must do if we will be able to take advantage of them is simply to follow them. We don't have the power to oppose them. So as the saying goes, when you can't beat them, you join them.
Therefore, by studying the cryptocurrency market and knowing when the whales are accumulating, pushing the market up, distributing, and when they're selling; we can take advantage of them. By simply following their lead.
Question 3
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)
Here are the latest Top 10 Cryptocurrencies, when I'm doing my homework
I'm going to be showing the detailed analysis of the phases in the cryptocurrency chart of AAVE/BNB on Binance. Here is my example below
This is a weekly chart of AAVE/BNB. As you can see above I labelled it from 1-4.
Label 1 represents the Accumulation Phase. This is the phase where the whales start buying and selling the cryptocurrency. Although, in not so large amounts, therefore we don't see drastic changes in the value of the cryptocurrency at this phase. But it's important to keep in mind at this phase that the whales are getting ready to control the market and make profits from it.
Label 2 represents the Uptrend Phase. At this phase the whales start buying the cryptocurrency in very large quantities or amounts. And this raises the value of the cryptocurrency. They do this in a very short space of time. The reason why whales do this is to attract other investors to buy as well. As a small investor, these are times to take advantage of the existence of whales. Sometimes, you may also see some accumulation at this phase, because some investors may have already started selling. This phase is the bullish phase.
Label 3 represents the Distribution Phase. At this phase, the whales have made enough profits for themselves. Hence, they start selling their cryptocurrency bit by bit. Until they've sold it all. At this stage some other investors may still be buying, thinking that the whales are still buying. So there will be some resistance. But because of the control the whales have over the market, they'll end up bringing the value of the cryptocurrency down, as they keep on selling.
Label 4 represents the Downtrend Phase. At this phase, the other small investors will start noticing that the whales have already sold all their cryptocurrencies. As a result, fear gets into the minds of other investors and they want to sell too, so that they don't incur losses. When the situation of panic gets into the market, the charts starts going down, turning red. And this occurs within a short space of time. And the cryptocurrency loses a lot of value as a result.
Question 4
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.
If I was a whale, having huge amount to invest in cryptocurrency, I'll invest in AAVE. Here is my explanation why I'll choose to invest in AAVE
It's currently ranked #29 on the Top 30 cryptocurrencies Source
It's current price is $263.89. But if you look at the chart below, you can see that it reached an all time high of $648.54. Which means to me that there's a tendency of it's value going up to that point again and above. As a whale, I can invest in that
With it's current price at $263.89, I think now is a good time to start accumulating AAVE, if I was a whale.
Aave system is a decentralized loan system that led to the growth of new interests in the Defi market source. If I was a whale, I'll say that I like what the coin is about.
Wallet investor.com believes that Aave is a perfect investment opportunity for the long-term. The average coin price of AAVE will be roughly $1327.240 per coin at the end of December 2021 source
Question 5
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'm choosing the chart AAVE/BNB on Binance to do this analysis as a whale. From this screenshot below, I labelled 1-3. In which case, label 1 represents the accumulation phase. As a whale this is the phase where I'll start accumulating. Buying and selling smaller quantities.
Then the next phase is the uptrend phase, which I labelled 2. At this stage, I'll start buying the cryptocurrency in large quantites, therefore pushing the price up, and creating a bullish trend.
Finally once it reaches my desired target, which I labelled 3, and is called the distribution phase, I'll start selling my cryptocurrency and I'll take my profits.
Conclusion
The importance of whales in cryptocurrency cannot be overemphasized. The whales control the values of the cryptocurrencies. Truly, small investors should actually fear whales because they have the power to do whatever they want with the value of cryptocurrencies.
But at the same time, small investors can really take advantage of the existence of these whales to also make good profits. By simply studying the cryptocurrency and following the lead of the whales.
Thanks again Prof. @wahyunahrul!