Smart Money has always been a focus in the cryptocurrency market, and strategies that track Smart Money can provide substantial returns for ordinary cryptocurrency investors. In fact, the percentage of investors using Smart Money-based cryptocurrency trading indicators, strategies, and tools is gradually increasing. Next, veDAO will lead everyone to understand Smart Money in the cryptocurrency market and how to track them?
1. What is Smart Money?
Smart Money refers to professional investment institutions or individual investors in the cryptocurrency market who have outstanding research capabilities and information advantages. They have rich trading experience and excellent historical performance. Generally, they have relatively large capital, mature investment ideas, and a more comprehensive understanding of the cryptocurrency market compared to ordinary investors. The dynamics of Smart Money are of special significance to ordinary cryptocurrency investors.
2. Why track Smart Money?
Due to the high volatility of cryptocurrency assets, severe information asymmetry in the market, and the strengthening of the Matthew Effect in the cryptocurrency market as the number of cryptocurrency assets increases, ordinary investors find it increasingly difficult to obtain market Alpha, while a small number of Smart Money investors are making significant profits. This is because Smart Money can access information and resources that ordinary traders cannot easily obtain, giving them an advantage in the cryptocurrency market. For ordinary cryptocurrency investors, tracking Smart Money in the cryptocurrency market can help identify market trends earlier, discover more and better investment opportunities in a timely manner, and achieve the same level of profits as Smart Money or reduce the gap in returns with Smart Money.
3. How to track Smart Money?
In the cryptocurrency market, due to the public and transparent nature of the blockchain, users can view every transaction conducted on the blockchain. Through data processing and filtering, it is theoretically and practically possible to identify the transactions conducted by Smart Money.
To track Smart Money, the first step is to discover and find Smart Money. Investors need to use blockchain explorers or third-party tools related to Smart Money, combined with their own goals and needs, to filter and find Smart Money that suits them. The main criterion for filtering Smart Money is based on its past on-chain interactions and transactions. Selection is based on the behavior patterns of transaction or interaction types, quantified historical performance evaluation metrics, fund flows, and interaction protocols. Once Smart Money has been found, the next step is to track them. Investors can choose to fully replicate their trades or replicate their investment portfolios entirely for ordinary cryptocurrency investors, tracking Smart Money can be done by relying on their trades or fully replicating their investment portfolios.
And I'm going to translate the following content for you: In order to directly benefit from their insights and skills, and thus achieve more with less effort in trading and more efficiently gain alpha in the cryptocurrency market. But it should be noted that not all smart money is as smart as it appears. Blindly copying all their trades without conducting in-depth research is often unwise, as these traders often enter the market at lower prices while later traders operate under different market conditions. Also, some smart money has multiple accounts, and the behavior of a single account does not necessarily represent the true behavior of smart money. It is currently difficult to determine how many accounts a smart money entity has. A better approach is to consider tracking smart money strategies as an important reference dimension and combine other indicators and analysis for investment decisions. Currently, there are many dedicated platforms in the cryptocurrency market that track smart money. Here, veDAO has selected 5 simple yet powerful options for everyone. 3.1 Nansen As one of the most well-known blockchain analytics platforms for tracking smart money, Nansen provides a simple way to research popular projects, new trends, and significant on-chain activities. The platform offers various free tools and allows traders to conduct more in-depth research on individual projects, smart contracts, and wallets. Its most relevant feature is called "Smart Money," which, as the name suggests, allows you to track the on-chain activities of a large number of labeled wallets. Nansen's Smart Money Tracker provides three main pieces of information about smart money (or addresses)'s on-chain activities: - Transaction Volume - Token Holdings - Portfolio Activity With these features, users can better understand the behavior and activities of smart money entities and make more informed investment decisions.DEX Trading: Tracking smart money's trading activities in the top DEX market.
Transfers and Interactions: Tracking all recent transfers of smart money, along with the contract agreements it interacts with.
Token Holding: Explore the token holding of Smart Money and their profit rankings
Importantly, Nansen's Smart Money Tracker allows users to filter Smart Money addresses, including specific types such as funds, smart DEX traders, airdrop experts, smart NFT traders, IDO experts, staking experts, etc. This can help users refine their searches, including custom transaction types that interest them.
Nansen's Smart Money Tracker is currently only available to paid users and is relatively expensive. However, Nansen does offer a $9 7-day free trial to evaluate its value to users.
3.2, Dune+Debank
Dune Analytics is a user-driven blockchain analytics platform where anyone can create their own dashboards and share them for others to use. The platform provides a wide range of community-created dashboards that users can leverage as part of their trading decision-making process. Through in-depth research, veDAO has identified two of the best dashboards that can help users identify and track Smart Money.
A, Token God Mode Dashboard
This is a tool created by a user named defimochi. This tool allows users to find a wealth of data on specific tokens of interest, helping users uncover Smart Money trades that may be associated with those tokens.
Link: https://dune.com/defimochi/token-god-mode
By inputting a token address, selecting a tracking time range (e.g., the past 30 days), and choosing the relevant blockchain, the dashboard presents a list of the top 100 trades by estimated profit (among other data). Users can then browse this list and manually filter out MEV robots to find true Smart Money traders, i.e., those who are making the most significant profit from their trades.
Link: https://debank.com/
B. GMX Trader Leaderboard Dashboard
This dashboard is created by a user named adamzjw to identify smart money traders based on profit or profit-loss ratio. Users can input their addresses into DeBank or other portfolio tracking tools to further analyze their on-chain activities.
Link: https://dune.com/adamzjw/gmx-trader-leaderboard
3.3. CryptoRank
CryptoRank can be used to detect recent funds' new trends. Although the platform does not provide real-time on-chain analysis like the tools mentioned above, CryptoRank offers a wealth of data that can be used to uncover new market trends and opportunities. The platform provides various tools and trackers to help users gain a deep understanding of the market and the current investment situation.
For example, the functionality of Crypto Funds and Investors can be used to gain insights into the investment strategies of well-known funds and angel investors. This tool allows you to browse through a large number of venture capital funds, angel investors, and independent traders' portfolios, and understand their current performance. Users can also see lists of recent projects and recent funding rounds, showing newly funded projects (and established projects) and detailed information about the entities involved.
This can help users understand the market trends perceived by smart money, enabling them to make wiser investment decisions.
For a broader perspective on smart money in the crypto space, CryptoRank also provides various charts highlighting important data such as monthly fund movements, most popular investment categories, and most active funds.
3.4, Arkham
Arkham allows users to find the most profitable traders and is a relatively new on-chain analytics platform. The platform does not automatically provide smart money wallet addresses; users need to search for them on their own. The platform provides rich information that users can use for some detective work to find smart money. Users can easily find a list of active smart money traders using their trade filters and then further filter for the traders currently in the lead.
For example, by filtering the results for trades made only in the last hour, with a minimum value of $50,000, and limited to fund transactions, users can see significant recent trades made by smart money.
Then, users can browse this list to find new or established crypto assets that are favored by smart money traders, or to find particularly active wallets that may require further investigation. Once a potentially smart money is identified, you can simply click on its tag or wallet address to access a wealth of additional data, including its recent profit/loss chart.
By browsing several smart money wallets and comparing their recent profitability, users are able to find a suitable wallet address that they would like to track. From here, users can view their current on-chain holdings, examine their investment portfolio, or analyze their trading strategies by scanning their recent transactions.
Arkham project official website address: https://www.arkhamintelligence.com/
3.5, Chainalysis
Chainalysis helps users track the behavior of smart money by tracking and analyzing transaction activities on the blockchain, and provides information about market participants and investment strategies. This can help users make wiser investment decisions and better understand market dynamics.
By using its proprietary analysis tools and techniques, Chainalysis can track and analyze transaction activities on the blockchain. It can identify transaction patterns and behaviors of smart money, as well as the relationship between smart money and specific projects or entities.
Chainalysis' platform helps users understand the investment strategies and behaviors of smart money, as well as their influence in the market. By analyzing the transactions and holdings of smart money, users can gain insights into market trends and investment opportunities.
Through tracking the flow of smart money, Chainalysis can provide detailed information about market participants including investors, funds, and traders. This information can help users understand market dynamics and make more informed investment decisions.
Chainalysis Platform URL：https://www.chainalysis.com/chainalysis-business-data/
In addition to the above-mentioned 5 tools, veDAO Research Institute has also compiled several other commonly used tools to help users easily find smart money.
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