Cryptocurrencies had been in existence for almost a decade, with the genesis of Bitcoin in 2009. However, the cryptocurrency market is still in its infancy. With such a young market, there are bound to be many problems that it will face. This, by extension, results in an incredibly volatile market, with the prices of various cryptocurrencies fluctuating tens, if not hundreds of percent in a matter of days. This article will discuss the four entities present in the cryptocurrency market, the roles each of them play and the dynamics between them. There would also be a rough guide regarding the best method (in my opinion) to profit from crypto.
There are currently four entities in the cryptocurrency market; small fishes, whales, institutions, and government. As the name implies, small fishes are the minor players in this multi-billion-dollar cryptocurrency market. So, who is considered a small fish? To put it simply, a small fish is any crypto-investor that does not have a huge impact on the cryptocurrency market as an individual. This could range from a simple student placing $500 into Bitcoin to millionaires that place a million into cryptocurrency.
Whales are individuals or groups of individuals that have the ability to shake the cryptocurrency market. This encompasses notable individuals in the financial world, including CEOs, or a group of investors that can pump hundreds of millions of dollars into the cryptocurrency market.
The name ‘Creators’ is pretty straightforward; they are simply the creators of cryptocurrency (thus institutions). There are currently over 1400 different cryptocurrencies, with some having tens to hundreds of staff, to a small company of only a few developers. The reason for so many different types of crypto is because anyone can create their own crypto with relative ease. This results in many rubbish crypto that are released, even when there is a lack of funding and development.
Government regulations have been one of, if not the biggest influencing factor in the cryptocurrency market. Unlike stock exchanges, where prices can be relatively stable due to some regulations in place, the cryptocurrency market is still in its infancy. Most of the investors in the cryptocurrency market operate based on speculation rather than facts. Therefore, any bad news, especially regarding future government regulations would cause a massive drop in price. Because of the sudden influx of investors as mentioned before, this had governments hastily implementing temporary regulations to protect its citizens. Many governments have yet to put in place any form of protection for investors.
To put it simply, the four entities mentioned all contribute to the cryptocurrency market, and each has their own role to play. To understand the market, we need to first understand the dynamics between the four entities. The focus would be trained on the small fishes because they make up the majority of the cryptocurrency market. Whales are there to rack up profits, and they would try to influence the price, be it up or down. The creators’ goal is to promote its crypto to the public, and hope that the small fishes would purchase their crypto and increase its price. Companies announce their involvement with cryptocurrency in order to raise their share prices by taking advantage of the hot-headed investors (small fishes). The governments are there to try and protect the small fishes from such a volatile market. As mentioned, every action is geared to influence the small fishes.
