Whales use sophisticated trading strategies to take advantage of market opportunities. Among the most important is statistical arbitrage, which is an advanced trading strategy based on mathematical analysis and the discovery of historical relationships between prices to predict movements and capitalize on them in the medium to long term.
Forms of these advanced strategies include the following:
Pair trading
· The main idea: Trading two currencies with a strong historical price relationship, such as Bitcoin (BTC) and Ethereum (ETH). When prices diverge from their usual path, the weaker currency is bought and the stronger one is sold (short), waiting for them to converge again.
· Practical example: If the price of Bitcoin sharply rises compared to Ethereum contrary to historical patterns, whales may buy Ethereum and short Bitcoin.
Arbitrage across platforms
· The main idea: Taking advantage of the price difference of the same currency between two different trading platforms. Buy from the platform with the lower price and sell on the platform with the higher price.
· The challenge: Execution requires extremely fast speed using automated programs (bots) to outperform the competition, as price discrepancies vanish in seconds.
Basket trading
· The main idea: Expanding the pair trading strategy to include a "basket" of several correlated currencies, providing better diversification and reducing risk compared to a single pair.
💼 Currencies currently focused on by whales
While their strategies remain confidential, one can infer their interests by monitoring:
1. High market cap and liquidity currencies: Such as Bitcoin (BTC) and Ethereum (ETH), these are the most attractive to large capital due to the ease of entering and exiting without significantly impacting the price.
2. New coin offerings for institutions: Sometimes whales buy large amounts of a specific coin before it is listed on major trading platforms like Coinbase or Binance, potentially leading to a price increase later.
📈 The most important free tools to track whale movements
You can use these tools to gain insights into whale activity:
· Monitoring major wallets: Sites like Etherscan (for the Ethereum network) and BscScan (for the BNB Smart Chain network) allow tracking of large wallets and viewing their real-time movements.
· Blockchain data platforms: Platforms like Nansen, Glassnode, and Lookonchain provide advanced analytics showing whale movements, accumulation positions, and money flows in and out of centralized platforms.
· Trading indicators: Monitoring unusual trading volume or a significant increase in open futures contracts for a currency on platforms like Binance or Bybit can indicate significant activity.
💎 Tips for individual investors
1. Be a follower, not a follower: Whale movements may give signals, but they are not always a guarantee of profit. They may sell right after a rise.
2. Diversification is the key to safety: Do not put all your capital into one currency based on a rumor about whale accumulation.
3. Long-term investment: Tracking whale movements is more useful for the medium to long term, not for high-risk daily speculation.
