How to Spot and Track Smart Money in Cryptocurrency

BeginnerJul 24, 2024
This article explores how to invest by tracking Smart Money in the cryptocurrency market. Smart money usually refers to market participants with outstanding performance, such as whale wallets, ordinary wallets with high transaction winning rates, etc. This article provides several steps to identify and track these wallets.
How to Spot and Track Smart Money in Cryptocurrency

So, what is Smart Money?

In simple terms, Smart Money in cryptocurrency refers to market participants who achieve the highest returns. From my perspective, Smart Money wallets can be divided into two main types:

  1. Whale wallets: These belong to institutions, funds, and influential individuals.
  2. Regular wallets with high transaction success rates: This category includes wallets that excel in trading, yield farming, staking, and receiving airdrops. There are also tools available for analyzing Smart Money, like the popular Nansen, which offers query and tracking functions. See the image below for an example.

But similar features of Nansen require payment. Are there any free tools that can help?

There must be some. For example, you can use tools like Dune to search for whale wallets and see what they have been doing (buying/selling) recently. As shown below.

Next, you can use tools like Debank or Arkham, which we discussed in previous articles, to look up the historical transaction records and current holdings of specific wallet addresses. See the image below for an example.

However, whales are aware that many people track their wallets, so they often use smaller wallets for trading to avoid detection. Therefore, it might be more effective to directly track wallets with high transaction success rates.

Step 1: Find Smart Wallets

How can we find wallet addresses with high transaction success rates? We can use the tool DEXTools, which was mentioned in previous articles. For example, to locate Smart Money on the Solana chain, go to DEXTools, select the Solana category, and sort by Gainers. See the image below for reference.

Just enter a currency page, then find the Trade History column, click the Date button inside to sort by date, and you will see a list of all wallet addresses that traded the token earliest. As shown below.

Generally speaking, for a currency with a relatively large increase, if these wallets can discover and buy this currency at the first time, there are two main possibilities: one is insiders (such as project parties or internal insiders); He is a smart person who can proactively discover new opportunities.

Next, we look at the wallet addresses that traded the token earliest. By clicking the button in the Others column on the right (the number on the button shows how many transactions this wallet has made with the token), we can check the PNL (Profit and Loss) of these wallets. See the image below for details.

Then, find the wallet addresses with high PNL, and click the Maker button to copy the address. This might be the Smart Wallet you’re looking for. In addition to DEXTools, you can also use Dex Screener, mentioned in the previous article. It offers similar functions to DEXTools but has a separate Top Traders section at the bottom of the token page, listing different wallet addresses by PNL. You can select from there directly. See the image below for an example.

Step 2: Analyze Smart Wallets

After identifying potential wallet addresses, the next step is to analyze these addresses further. While using on-chain explorers like solscan can provide detailed data, they may not offer the best user experience for most people. Therefore, we can use wallet analysis tools such as Solsniffer and coinstats. First, check the wallet’s historical transaction success rate with Solsniffer. If you find that the wallet has an overall success rate of 65% or higher and a PNL exceeding $300,000 (you can adjust these thresholds based on your risk tolerance), then congratulations, you might have found a smart wallet worth tracking. See the image below for an example.

Admittedly, the process might be a bit more cumbersome due to the PNL condition, but the exploration can be quite interesting. Next, use coinstats to check which tokens the wallet still holds and the purchase price of each token. See the image below for an example.

By now you should have the addresses of a few smart wallets and discovered some of the coins they hold. So, should we follow the orders directly and buy some of these currencies?

Don’t worry, let’s continue reading.

Step 3. Track Wallet Transactions

There are two main ideas for tracking wallets:

The firstIt is to directly follow the order to buy the currency currently held by the corresponding wallet.

For example, after the above two steps, you already have a list of alternative tokens, then you can do two more basic checks before considering copy buying.

The first is the safety inspection.In order to avoid falling into some possible traps, it is necessary to conduct a security check on the token contract before considering copying the order.. The tool we can use here is Rugcheck, which is a tool specifically used to detect the security of Solana token contracts.

The specific usage of this tool is also very simple. Just enter the contract address (CA) of the corresponding token to search. If the displayed result is Danger, then be more careful. As shown below.

Next is an examination of social trends. If a project has a good and active community, then from a certain perspective, it will have the advantage of hype. The tool we can use here is TwitterScore, which is a platform that automatically generates scores for Twitter accounts based on the number of Twitter followers. It can also classify and sort various project Twitter accounts and display funds (VC). Are you following this project? . As shown below.

And if you think the data on security projects and social trends are good, then you can consider buying this project with a small amount (it is recommended that for such high-risk transactions, the investment should not exceed 1% of your total position).

The second kindIt directly tracks the next transactions of the corresponding wallet and performs automatic sniper follow-up.

This kind of operation is usually carried out with the help of trading robots (Telegram Bots). Currently, many robots can monitor the latest transactions of designated wallets in real time and automatically perform sniper buying operations.

Nowadays, there are many kinds of Bots. The following is a list of some of the more commonly used Bots. As shown below.

Note that different robots support different chains, just choose according to your personal preference. In addition, the official website of each robot generally provides detailed operating instructions. Friends who are interested in this can go to the corresponding official website to learn more or search on Google. We won’t go into details here.

At the end of this article, let’s take a look at what other information is worthy of attention in recent days:

June 30, Ethereum last week experienced its lowest average gas price since November 2016, with 9 of the 10 cheapest periods occurring last week. As shown below.

Since the Dencun (Cancun) upgrade in mid-March this year, which brought blobs to Ethereum and reduced the cost of transactions on the L2 network, the median price of gas fees has actually fallen steadily. But on the other hand, it does indicate that ecological activity has decreased recently.

Although the lower gas fee has also caused the destruction rate of Ethereum to currently fall to the lowest point in 12 months, the SUPPLY GROWTH in the last 7 days is 0.62%/year (slight inflation continues), but if we extend the time If you look at it, ETH will still be deflationary.

On the other hand, because the current expectations for the Ethereum spot ETF are still there, judging from the call option (C) data, some investors seem to be relatively bullish about ETH in September. As shown below.

June 29, Bitcoin mining revenue per TH/s (7-day MA) continues to hit new lows, and the upward trend that began in June has been broken again. As shown below.

Since October 2023, the BTC balance in the wallets of Bitcoin miners has continued to decrease by 30,000 pieces, and the current total is approximately 1.8 million pieces. The main reasons for this may be that, first, the operating costs of mining companies have increased after the Bitcoin halving, and they need to sell Bitcoins to obtain working capital; second, smaller mining companies may have been unable to survive and can only choose to sell Bitcoins. Coin profit taking.

On the other hand, according to relevant media reports, the number of cryptocurrency ATMs installed globally surged by 17.8% in the past 12 months to 38,279 units. This year alone (January to June), the number of new ATM machines reached 2,564. Of these, 82% of cryptocurrency ATMs are located in the United States, with Canada in second place at 7.7%. There are 169 ATMs in Hong Kong. Currently, 72 of the 193 United Nations-recognized countries around the world have cryptocurrency ATMs. As shown below.

Overall, market sentiment is undergoing a positive reset after reaching a periodic (bubble) high in April this year. Pessimistic people always see disappointment in the present, while optimistic people find new hope in the laws of cycles.

Disclaimer:

  1. This article is reprinted from [话李话外], All copyrights belong to the original author [话李话外]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
  2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
  3. Translations of this article into other languages are provided by the Gate Learn team. They may not be copied, distributed, or plagiarized without mentioning Gate.io.

How to Spot and Track Smart Money in Cryptocurrency

BeginnerJul 24, 2024
This article explores how to invest by tracking Smart Money in the cryptocurrency market. Smart money usually refers to market participants with outstanding performance, such as whale wallets, ordinary wallets with high transaction winning rates, etc. This article provides several steps to identify and track these wallets.
How to Spot and Track Smart Money in Cryptocurrency

So, what is Smart Money?

In simple terms, Smart Money in cryptocurrency refers to market participants who achieve the highest returns. From my perspective, Smart Money wallets can be divided into two main types:

  1. Whale wallets: These belong to institutions, funds, and influential individuals.
  2. Regular wallets with high transaction success rates: This category includes wallets that excel in trading, yield farming, staking, and receiving airdrops. There are also tools available for analyzing Smart Money, like the popular Nansen, which offers query and tracking functions. See the image below for an example.

But similar features of Nansen require payment. Are there any free tools that can help?

There must be some. For example, you can use tools like Dune to search for whale wallets and see what they have been doing (buying/selling) recently. As shown below.

Next, you can use tools like Debank or Arkham, which we discussed in previous articles, to look up the historical transaction records and current holdings of specific wallet addresses. See the image below for an example.

However, whales are aware that many people track their wallets, so they often use smaller wallets for trading to avoid detection. Therefore, it might be more effective to directly track wallets with high transaction success rates.

Step 1: Find Smart Wallets

How can we find wallet addresses with high transaction success rates? We can use the tool DEXTools, which was mentioned in previous articles. For example, to locate Smart Money on the Solana chain, go to DEXTools, select the Solana category, and sort by Gainers. See the image below for reference.

Just enter a currency page, then find the Trade History column, click the Date button inside to sort by date, and you will see a list of all wallet addresses that traded the token earliest. As shown below.

Generally speaking, for a currency with a relatively large increase, if these wallets can discover and buy this currency at the first time, there are two main possibilities: one is insiders (such as project parties or internal insiders); He is a smart person who can proactively discover new opportunities.

Next, we look at the wallet addresses that traded the token earliest. By clicking the button in the Others column on the right (the number on the button shows how many transactions this wallet has made with the token), we can check the PNL (Profit and Loss) of these wallets. See the image below for details.

Then, find the wallet addresses with high PNL, and click the Maker button to copy the address. This might be the Smart Wallet you’re looking for. In addition to DEXTools, you can also use Dex Screener, mentioned in the previous article. It offers similar functions to DEXTools but has a separate Top Traders section at the bottom of the token page, listing different wallet addresses by PNL. You can select from there directly. See the image below for an example.

Step 2: Analyze Smart Wallets

After identifying potential wallet addresses, the next step is to analyze these addresses further. While using on-chain explorers like solscan can provide detailed data, they may not offer the best user experience for most people. Therefore, we can use wallet analysis tools such as Solsniffer and coinstats. First, check the wallet’s historical transaction success rate with Solsniffer. If you find that the wallet has an overall success rate of 65% or higher and a PNL exceeding $300,000 (you can adjust these thresholds based on your risk tolerance), then congratulations, you might have found a smart wallet worth tracking. See the image below for an example.

Admittedly, the process might be a bit more cumbersome due to the PNL condition, but the exploration can be quite interesting. Next, use coinstats to check which tokens the wallet still holds and the purchase price of each token. See the image below for an example.

By now you should have the addresses of a few smart wallets and discovered some of the coins they hold. So, should we follow the orders directly and buy some of these currencies?

Don’t worry, let’s continue reading.

Step 3. Track Wallet Transactions

There are two main ideas for tracking wallets:

The firstIt is to directly follow the order to buy the currency currently held by the corresponding wallet.

For example, after the above two steps, you already have a list of alternative tokens, then you can do two more basic checks before considering copy buying.

The first is the safety inspection.In order to avoid falling into some possible traps, it is necessary to conduct a security check on the token contract before considering copying the order.. The tool we can use here is Rugcheck, which is a tool specifically used to detect the security of Solana token contracts.

The specific usage of this tool is also very simple. Just enter the contract address (CA) of the corresponding token to search. If the displayed result is Danger, then be more careful. As shown below.

Next is an examination of social trends. If a project has a good and active community, then from a certain perspective, it will have the advantage of hype. The tool we can use here is TwitterScore, which is a platform that automatically generates scores for Twitter accounts based on the number of Twitter followers. It can also classify and sort various project Twitter accounts and display funds (VC). Are you following this project? . As shown below.

And if you think the data on security projects and social trends are good, then you can consider buying this project with a small amount (it is recommended that for such high-risk transactions, the investment should not exceed 1% of your total position).

The second kindIt directly tracks the next transactions of the corresponding wallet and performs automatic sniper follow-up.

This kind of operation is usually carried out with the help of trading robots (Telegram Bots). Currently, many robots can monitor the latest transactions of designated wallets in real time and automatically perform sniper buying operations.

Nowadays, there are many kinds of Bots. The following is a list of some of the more commonly used Bots. As shown below.

Note that different robots support different chains, just choose according to your personal preference. In addition, the official website of each robot generally provides detailed operating instructions. Friends who are interested in this can go to the corresponding official website to learn more or search on Google. We won’t go into details here.

At the end of this article, let’s take a look at what other information is worthy of attention in recent days:

June 30, Ethereum last week experienced its lowest average gas price since November 2016, with 9 of the 10 cheapest periods occurring last week. As shown below.

Since the Dencun (Cancun) upgrade in mid-March this year, which brought blobs to Ethereum and reduced the cost of transactions on the L2 network, the median price of gas fees has actually fallen steadily. But on the other hand, it does indicate that ecological activity has decreased recently.

Although the lower gas fee has also caused the destruction rate of Ethereum to currently fall to the lowest point in 12 months, the SUPPLY GROWTH in the last 7 days is 0.62%/year (slight inflation continues), but if we extend the time If you look at it, ETH will still be deflationary.

On the other hand, because the current expectations for the Ethereum spot ETF are still there, judging from the call option (C) data, some investors seem to be relatively bullish about ETH in September. As shown below.

June 29, Bitcoin mining revenue per TH/s (7-day MA) continues to hit new lows, and the upward trend that began in June has been broken again. As shown below.

Since October 2023, the BTC balance in the wallets of Bitcoin miners has continued to decrease by 30,000 pieces, and the current total is approximately 1.8 million pieces. The main reasons for this may be that, first, the operating costs of mining companies have increased after the Bitcoin halving, and they need to sell Bitcoins to obtain working capital; second, smaller mining companies may have been unable to survive and can only choose to sell Bitcoins. Coin profit taking.

On the other hand, according to relevant media reports, the number of cryptocurrency ATMs installed globally surged by 17.8% in the past 12 months to 38,279 units. This year alone (January to June), the number of new ATM machines reached 2,564. Of these, 82% of cryptocurrency ATMs are located in the United States, with Canada in second place at 7.7%. There are 169 ATMs in Hong Kong. Currently, 72 of the 193 United Nations-recognized countries around the world have cryptocurrency ATMs. As shown below.

Overall, market sentiment is undergoing a positive reset after reaching a periodic (bubble) high in April this year. Pessimistic people always see disappointment in the present, while optimistic people find new hope in the laws of cycles.

Disclaimer:

  1. This article is reprinted from [话李话外], All copyrights belong to the original author [话李话外]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
  2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
  3. Translations of this article into other languages are provided by the Gate Learn team. They may not be copied, distributed, or plagiarized without mentioning Gate.io.
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