Whales, in this context, are major holders of Bitcoin, and their strategic moves have a significant effect on market dynamics. In situations where whales purchase large amounts of BTC, they take most of the circulating supply away from the exchanges, increasing the price when there is low supply for high demand. This might make any supply squeeze quite impossible because it makes it difficult for other buyers to acquire Bitcoin without driving the price upward. The current trend of whale accumulation, at about 1.5 million BTC bought in the last six months, is indicative of an intentional plan to capitalize on lower prices in the middle of broader market volatility.
Their buying activity alone can send market sentiment running. Whales are, in most cases, quite sophisticated investors, and once they make a move, that means that they are convinced of Bitcoin's long-term value-so smaller investors follow. It, in this sense, creates a ripple effect. Every spark starts up the buying interest and thus can begin to drive up a rally in price. By the same virtue, huge sell-offs from whales can create panic-falling prices are thus expected.
Besides, whales can also influence and extend their power to manipulate the short-term movement of prices: for example, they may create a temporary decline in price by selling some of their inventory and then repurchasing at lower prices. Such a tactic would help them solidify positions and shake off weaker hands. In short, whales will contribute to shaping Bitcoin's market trends by means of huge purchases or smart trades.
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~ Nesaty