BASED ON THE UNDERSTANDING THAT YOU HAVE GAINED FROM THIS CLASS, EXPLAIN WHY WHALES ARE SO FEARED BY SMALL INVESTORS
Based on my understanding on the knowledge I accumulated from this class, I would love to describe what a whale is and the reasons why a person or group of persons are referred to as a whale.
A whale is a large specie of aquatic animal (mammals), they are warm blooded and nurse their young as we do.
A whale is presently classified as the largest known mammal ever to have existed in the world. In the ocean, the presence of a whale is undeniably recognized by other aquatic animals because of it's vast size. Whales are often feared by other aquatic animals because of it's ability to bring to ruin group of aquatic animals in the ocean just at an attempt and with ease.
Now, in the cryptocurrency block chain, there are persons or group of persons terned as a whale. They are given that tag not because of their physical appearance nor their size, but because of how greatly they affect the cryptocurrency market. They have the ability to manipulate the price of Cryptocurrency and this is because of the huge amount of money they invested into cryptocurrency and this play a big role in the rise and fall in value of cryptocurrency.
And because of the ability of whales to manipulate the price of cryptocurrency, they are so feared by small investors. The profit as well as the loss made by small investors is dependent on the manipulative actions of the whales. If whales decide to pull out their money from the market, the value of cryptocurrency will depreciate greatly and this will bring about great loss to small investors while the whales are at massive profit. And for this reason, the whales are so much feared by small investors.
WILL WE ALWAYS BE ABLE TO TAKE ADVANTAGES OF THE WHALES THAT IS SO FEARED?
From my view point, it is possible to take advantages of these whales that are so feared by small investors, but this requires constant technical analysis. We would need to understand the phases used by whales, we will also need to know when they will love to pull out their money from cryptocurrency. And this phases are summarize below;
The accumulation phase: This is the stage whereby coins have depreciated in value, it is at this point whales tend to accumulate coin in large amount and with little value per coin. As whales invest their money, the prices of coins tend to rise and this lead us to the next phase;
Distribution phase: The distribution stage is stage whereby whales have already invested and this have led to increase in the value of coins, these increase attracts other short term small investors, and as they invest, this result in the continuous rise in value of cryptocurrency and this will attract more and more investors. As the prices increases, it will get to a point where the whales would have made enough profit, it is at this point that the whales pull out their money and this will lead to rapid fall in the price of coins and this will leave the small investors devastated.
In a nutshell, understanding these phases will enable small investors to take advantages of the whales 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
As instructed by my professor, I hereby choose to analyze Tron(TRX) since it is not among the top 10 coins listed on coinmarketcap.
Source
From the screenshot above, we can see three different phases on how whales manipulate the market.
We can see the accumulation phase , the phase where whales buys coin in large quantities and the distribution stage where other investors venture in, in order to make profit.
We can also see the uptrend which is as a result of lots of investors venturing into TRX, and that the value of Tron rose above $0.15 from depreciated value of below $0.02287.
We can also notice the downtrend which is a period where the value of trons started decreasing and this happens immediately after whales have pulled out their money from the market. It is also at this point that small investors sell out their coins out of fear of loosing more money.
IF YOU ARE A WHALE, WHAT CRYPTOCURRENCY WOULD YOU CHOOSE TO INVEST OR TRADE, EXPLAIN WHY
As of the current prices of cryptocurrency, if I were a whale, u would choose to invest in steem. Being a member of the steemit block chain have made me realize that steem has a lot of promising potentials when compared to other coins.
As of January 3rd, 2018, steem hit it's all time high which is of the price $8.19 per steem, and looking at the current price of steem which is flunctuating within $0.38, has shown me that steem has a very great potential to give me a profit worth more than 20x the money I would invest. So if I were a whale, I would confidently invest on steem.
DO A KIND OF ANALYSIS AS A WHALE WITH THE PHASES THAT I EXPLAINED EARLIER ON THE CHART OF YOUR CHOSEN CRYPTOCURRENCY TO EXPLAIN HOW YOU WILL TAKE PROFIT
Well, much of the explanation to this question has been explained earlier, but in this case, I am going to be precise on how I will take my profit.
I will invest at the point where the price of Trx is $0.022, and after investing, I will try to manipulate the market inorder to bring in more investors. And finally when Trx gets to the price of $0.15, I will then take my profit because by then, I would have made enough profit.
After all these, I will wait for some time to manipulate the market again and repeat the cycle.
CONCLUSION
We have known and fully understood how whales manipulate the market and trick small investors into investing which aid maximum profit to them and lose to the small scale investors.
With this knowledge, I am determined to carefully analyze cryptocurrency before investing in order to avoid being a prey to whales. I hope we will all avoid being prey to whales.
All pix but that of question 4 are gotten from coinmarketcap.com