Trading beginners periodically see the following terms: “bulls,” “bears,” and “whales.” In order for the trading in the cryptocurrency market to bring profit, it is necessary to deal with them. It is not about becoming a zoologist: animal names indicate the current market price. Let’s look at them closer.
What the trend in the market is
When an analyst describes the situation in the cryptocurrency market, he or she uses the term “downward trend” or “upward trend.” An inexperienced trader is confused, but in reality, there is nothing complicated about it. The very concept of “trend” (“tendency”) is a certain mood of market participants. Traders are analyzing what is happening: the purchase or the sale of cryptocurrency.
When we say “downward trend,” we are talking about the active sale of cryptocurrency. If we say “upward,” there are massive purchases. Looking at the current trend, the trader sees what is happening with the price of the desired asset (e.g., Bitcoin).
Sometimes there is a situation where there is no specific trend in the market – upward or downward. We are talking about a side trend – “flat.” It indicates that the market is still, and the price is not going up or down. Traders understand that if the market is growing before encountering a side trend, the situation is likely to change after leaving the “flat.” It is not recommended to expect that the cryptocurrency will continue to rise in price.
WHO ARE THE BULLS?
Now that we understand the concept of trend, let’s see in more detail who influences the appearance of a particular price movement in the market. Let’s look at the bulls. They are market participants who need the asset price to rise. To do this, they find a cryptocurrency and open a long position. That is, when buying currency at a low price, the bull wants to close the transaction at the highest possible cost. If such participants become abundant in the market, the value of cryptocurrency starts to increase spontaneously. Then, analysts note that “bulls are in the market.” Traders have gained this definition because of their behavior. Yes, the bull raises the opponent when attacking. Traders also do their best to raise the price.
WHAT THE BEARS DO ON THE MARKET
Unlike bulls, bears are interested in the decrease in the value of the desired asset. Participants analyze the cryptocurrency whose price will start to decline in the near future (through negative news, for example). Most often, bears choose a short selling strategy: borrow a coin, sell at a high price, buy at a low price, and pay back the debt. Another option is to buy more coins at the end of the downward trend until the cost goes up. To identify these participants, the name “bear” was picked because of the behavior of these animals with their prey. When the predator finds the victim, it stomps its paw on the prey. This name becomes the traders.
WHERE THE WHALES SWAM FROM
Other market participants occupy a separate niche. The whales are the big players who hold the most assets. They affect the value of cryptocurrency by buying or selling a portion of coins.
The whales are:
- investors who have purchased many coins (such as Bitcoin) when the attention to cryptocurrency was not yet so high;
- first miners;
- heads of large organizations or hedge funds;
- large exchanges (e.g., Binance).
The whale chooses the following strategies:
- Sell below the market price, which leads to panic among other participants. Traders start selling coins, and the cunning whale buys assets again, but at a fallen price. Analysts noted that a similar situation occurred with the price of Bitcoin last week. The creator of the CryptO channel, Omar Bham, said in a recent video that whales are pressuring the market.
- Create the illusion of a market crash. In this case, the whale first issues a big order and then quickly cancels the application for execution. Other market participants are expecting the rate to go down; they are starting to buy coins quickly. The price of cryptocurrency is starting to rise, as demand increases. Now, the whale sells coins at a high price of the market and makes profits!
Bulls, bears, and whales are influential figures in the cryptocurrency market. However, there are also other participants: “rabbits,” “hamsters,” “wolves,” and “moose.” We’ll take a look at them in the following publications.
Editor: Daria Mukhina