So why are billionaires Mike Novogratz and Salinas Pliego making such a big deal of their bitcoin holdings now? Both of them came out with PR or interviews or something about owning ridiculous amounts of bitcoin. Pliego said that 10% of his liquid net worth is in crypto now, which is a large amount for someone with that kind of money.
There's only one reason that these folks come out with these reports:
Whales need retail investors to buffer their trades.
That's right — billionaires need you. Here's why.
Billionaires are Powerless
Whales don't actually want to move the price of an asset as they enter an investment. If they trade like a retail investor, they end up paying a huge premium just to get the amount of the asset they want. Whales do have the advantage of time, however. They can split their orders up into very small pieces, simulating a retail trader. They can also wait until retail traders come down to their price, because they are doing this for a living. Retail traders are looking over their shoulders trying not to get caught by the boss trading at work.
However, once the whales have their investment, they need others to raise the price of that investment on paper. Retail investors do this much more quickly than whales — smaller orders made in a time crunch aren't as efficient. Prices tend to "climb the ladder" on exchanges as people FOMO in after whales announce their participation in an investment.
It doesn't take many orders to raise the price of an asset on paper, just as whales can make multimillion dollar buys without moving the price much at all. What matters is the efficiency with which those trades are made. Retail traders are far more inefficient, they don't care as much about slippage, so they move the price with relatively little volume.
From the other perspective, billionaires are powerless without these retail investors. If they didn't get into the market in their haphazard way, the billionaires would never be able to cash in on the sideways market.
Flying from the Floor
Not only do retail traders give whales instant gratification with their crazy buys, they also provide room for whales to maneuver from the floor they created with their big buys.
Whales have stakeholders to answer to, and it's much easier to answer to those people if you're sitting on a nice 10-15% gain within hours or days of entering your position. It therefore makes a lot of sense to market the hell out of your position after you complete it. That's why both of these billionaires are announcing theirs with smiles on their faces. You can also expect six figure predictions and tons of bit-kissing (bitcoin butt kissing) about the virtues of the new economy. Don't believe them. These guys will sell the second they see an opportunity to do so without causing panic in the market.
When to Believe a Shill
Shills like Elliotrades and Bitboy are never to be believed. Another way to say this is — it is not in your best interest to believe what those people say. Though they are doing the same thing as the billionaires — shilling — it does not have the same effect. Why?
Billionaire shills are actually bringing something concrete to the table for the ecosystem they are shilling. Their buys set a legitimate floor for the investment — a zero point from which all smart investors can benefit. Yes, they control the floor, but at least you have a chance at profitability.
When the YouTube shills pump a coin, the effect lasts for only minutes or hours. After that, the coin often dives right through the previous floor, because the shills are not adding any substantial, sustainable volume to the investment.
As such, they should be treated like a blip on the radar when they shill. If you're going to pay attention to a shill, pay attention to the shill with real money. They are all doing it for their own benefit (and both take payments under the table), but one gives you a chance to get some money off the table while the other does not.
