The Survival of Major Crypto Whales During the Late 2017 Market Crash
The crypto market, known for its volatility and frequent cycles, saw a significant downturn in late 2017. Yet, despite this market crash, major crypto whales remained unaffected. But why? This article explores the strategies and insights behind the survival of these successful traders.
Understanding the Nature of Crypto Whales
First, let's define what we mean by 'crypto whales.' Crypto whales are individuals or entities that hold a substantial amount of a particular cryptocurrency, often measured in the millions of dollars' worth. These individuals are not just affluent by any means; they are prominent figures in the crypto market, renowned for their ability to navigate and influence the market.
Why Are They Successful?
Major crypto whales are highly intelligent and experienced investors, typically with a long history in the industry, dating back to even before the Mt Gox era. Their decision-making processes are informed by extensive knowledge of market cycles and trends, allowing them to make calculated and strategic trades. This understanding of cyclicality serves as a safeguard, helping them avoid making the same mistakes that led to previous market dips.
Strategies for Survival
Primarily, successful crypto whales adopt a long-term investment strategy, focusing on consistent, lower-risk trades rather than taking on excessive risks to realize large gains. This approach is evident in their focus on managing fewer trades, typically ranging from 100 to 1000, while still maintaining significant market influence. By limiting the number of trades, they significantly reduce their exposure to market fluctuations and risks.
Additionally, these traders utilize sophisticated risk management techniques, such as stop-loss orders. Stop-loss orders automatically sell the asset at a predetermined price to minimize losses when the market moves against their position. This proactive risk management ensures that even in major downturns, these traders can exit positions at favorable points, protecting their capital.
Market Influences on the Crash
While the specific catalyst for the 2017 market crash is subject to debate, two significant factors stand out: the liquidation of large positions by Mt Gox's trustees and the sell-off actions by ICOs looking to preserve capital.
Mt Gox Trustee's Actions: The trustee of Mt Gox, an early cryptocurrency exchange, was instrumental in repaying creditors by selling large amounts of Bitcoin. This massive liquidation drove down the market value of Bitcoin, contributing to the overall crash. Despite this, whale investors were well-prepared and aware of such events, allowing them to navigate through the volatility without significant losses.
ICO Liquidations: Initial Coin Offerings (ICOs) that had raised substantial sums of money also contributed to the sell-off. To preserve their capital, these entities liquidated large holdings of cryptocurrencies, further exacerbating the market crash. Again, crypto whales were less affected due to their strategic trading and risk management practices.
Conclusion
In conclusion, major crypto whales survived the 2017 market crash not only because of their intelligence and experience but also because of their smart investment strategies and effective risk management. While other market participants faced significant losses, these traders maintained their capital, often due to their understanding of market cycles and their ability to exit positions at optimal times. As the crypto market continues to evolve, it is crucial for both novice and experienced traders to learn from these strategies to mitigate risks and enhance returns.
Key Takeaways:
Major crypto whales are profiteers due to their experience and understanding of market cycles. Strategic, low-risk trades and sophisticated risk management techniques are key to their success. X (Mt Gox trustee's and ICOs' actions) were major contributors to the 2017 crash, but crypto whales were less affected by these events.