Who Are the ‘Shrimp’ and ‘Whale’ Investors Trying to Save Bitcoin from Collapse

The cryptocurrency market is falling. The price of bitcoin is down 67% from its all-time high in November last year.

On Wall Street, the American financial center, many are shedding riskier investments, such as cryptocurrencies, at a time when the shadow of a possible recession in the United States has caused big capital to seek refuge in more stable assets.

With rising inflation around the world, a rise in interest rates and a slowdown in the world economy fueled by the war in Ukraine, the market is experiencing what is known as the “crypto winter”, a prolonged period of low digital currency prices.

To add fuel to the fire, projects to regulate the sector are being debated in the United States – something that affects expectations about the price of cryptocurrencies -, while fraud and non-transparent deals appear with increasing frequency.

One of the cases that has had the biggest impact in recent months has been the collapse of the digital currency Luna, which has left hundreds of people in the lurch. They were investors who staked their money in search of great profitability and, in the end, watched helplessly as the currency collapsed.

For Edward Moya, a senior market analyst at consultancy Oanda, rising inflation played a key role in lowering prices.

“Cryptocurrencies plummeted after inflation triggered a wave of aggressive adjustments by central banks that led to risk assets falling sharply,” he told BBC News Mundo, the BBC’s Spanish service.

The desperate response of large institutional investors moving huge amounts of capital also played a role.

“The sense of panic intensified the cryptocurrency downturn after the entire cryptocurrency space in 2021 saw its investments cut,” argues Moya.

With all the bad momentum going, there are “crypto devotees” or “crypto evangelists” who are convinced that the current meltdown — particularly bitcoin — is part of one of the boom-and-bust cycles that have been present since digital currency appeared. on the market in 2009.

‘We are not selling’

The main argument of proponents of the currency is that in the long run, one bitcoin will be worth hundreds of thousands of dollars, which is why this bearish cycle would only be one part of this big run.

That the current price of bitcoin is less than a third of what it was worth just a few months ago is not a sign that the bubble has burst, advocates argue.

These are the people who tell the market: “we are not selling (the currency)”, as if it were a rallying cry.

As a brotherhood that wants to encourage its members to resist, when asked what to do with bitcoins, they reply with a resounding, “HODL” (which in coiner jargon is a way of saying “hold”, that is, hold or hold).

The term “HODL”, always capitalized on social media, apparently originated on a Bitcointalk forum, when a user wrote “I AM HODLING”, with a misspelling, giving rise to one of the most well-known expressions in the cryptographic world.

That’s exactly what some “shrimp investors” and some “whale investors” are doing: resisting the temptation to sell the currency, i.e. HODLING.

The shrimp and the whale

Still in the world of jargon, not everyone who is part of this universe is in the same category.

“Shrimps” are those who own less than one bitcoin (which is currently worth about R$105,000).

“Whales” are those who have more than one bitcoin in their investment portfolio. The “miners” are in charge of generating bitcoins using powerful computer networks that work with blockchain (or blockchain) technology, as explained by the analysis center Cryptocurrency Glassnode.

James Check, chief analyst at Glassnode and an avid supporter of cryptocurrencies, says that despite market vicissitudes, there are Cameroonian and whale investors who continued to buy bitcoin in 2022.

Especially shrimp, considered as a retail investor.

“Bitcoin is a unique asset, as most of those who have high conviction in this smart money are retailers,” he argues.

He adds that this is largely due to the fact that since the creation of bitcoin and during the time when it started to grow, it was Cameroon that bought the digital currency, i.e. ordinary individuals rather than millionaires or funds. institutional.

Other reasons have to do with the fact that information about the currency is now clearer and that, from the point of view of investors, there is more transparent data about the market.

“The small investor is willing to accept any downside, while the whale is more likely to jump ship if it feels there is a prolonged period of downturn in the cryptocurrency market,” argues Moya.

“Crypto winter may end in the next few months or early 2023, but so far, both small investors and whales seem determined to hold onto their cryptocurrencies,” says the economist.

This text was originally published here.