Have you ever gone whale watching? There’s something magical about watching these massive creatures swimming gracefully through the ocean. Well, in the world of crypto, whale watching takes on a whole new meaning and it could mean all the difference between making a smart trade or investment or not. And that’s why one of key metrics available in The Crypto App’s Pro and Pro+ services is dedicated to just that: watching the concentration of whales, or more specifically, large holders in a crypto asset.
What is the Concentration by Large Holders Metric?
The Concentration by Large Holders metric is a key feature available in IntoTheBlock’s Token Summary found in The Crypto App’s Pro and Pro+ services. This indicator aggregates the percentage of circulating supply held by whales (addresses holding over 1% of supply) and investors (addresses holding between 0.1%-1%). Assets with high supply concentration will have whales and/or investors controlling most of the volume, while assets with low supply concentration have most of the circulating supply held by retail users.
How Can I Use This Metric?
So why is this metric important? Simply put, it can help you estimate how decentralized or concentrated a crypto asset is. In general, it is preferable for a crypto asset to be held mostly by retail addresses as this points to a decentralized network with widespread adoption. Conversely, a high concentration of large holders poses risks that should be considered when evaluating an investment opportunity.
Here are two reasons why you should pay attention to this metric:
- High supply concentration points to low decentralization. If one person holds a large portion of the supply, it cannot be considered a decentralized ledger. In such cases, whales and investors can act maliciously to the expense of small holders.
- A large number of whales (especially high activity whales) points to few players moving the market. Therefore, it suggests that whales could potentially sell and crash the crypto-asset’s price.
By paying attention to the Concentration by Large Holders metric, you can screen crypto assets and de-risk your investment strategy. If the large holders’ concentration is too high, it may be wise to wait until the project becomes more decentralized or perhaps pass on it altogether. On the other hand, if the project is sufficiently decentralized, especially if it’s a relatively young project, that may serve as a good sign that it won’t be subject to the whims of a few dominant holders.
The Concentration by Large Holders metric is just one of many tools you can leverage to make more informed trading and investing decisions in the crypto space with The Crypto App’s Pro and Pro+ services. Claim your free 7-day trial today and start taking control of your crypto investments.
