A whale is an individual or entity holding massive amounts of cryptocurrency, typically enough to significantly influence market prices through their trading activity. Whales' buy and sell orders can move markets by 5-15% due to the sheer volume, and their wallet movements are tracked by on-chain analysts as indicators of market sentiment. Retail traders often provide "exit liquidity" for whales distributing during tops or buy during whale-induced panic at bottoms.
Example:
In November 2021, on-chain data revealed wallets holding 1,000+ Bitcoin (worth $60+ million each at the time) were systematically selling 10,000-20,000 BTC per week as price approached $69,000. These whales distributed their holdings to new retail buyers flooding into crypto during peak euphoria. Over eight weeks, whales reduced holdings by 150,000+ BTC while retail ownership increased. This distribution preceded Bitcoin's 75% crash to $16,000. Whales exited near the top while retail bought near the top and suffered losses.