How to track smart money in cryptocurrency? The first step towards financial freedom

Author: veDAO

Smart Money has always been the focus of attention in the crypto market. Strategies built around tracking Smart Money can indeed provide ordinary crypto investors with substantial returns. The reality in the crypto market is that the proportion of investors using Smart Money-based trading indicators, strategies, and tools is gradually increasing. Next, veDAO will guide everyone to understand Smart Money in the crypto market and how to track it.

1. What is Smart Money?

Smart Money refers to professional investment institutions or individual investors in the crypto market that possess outstanding research and investment capabilities and information advantages. They have rich trading experience and excellent historical performance, generally managing relatively large amounts of capital. Their investment philosophies are mature, and their understanding of the crypto market is more comprehensive and thorough than that of ordinary investors. The dynamics of Smart Money hold special significance for ordinary crypto market investors.

2. Why track Smart Money?

The high volatility of crypto assets and the severe information asymmetry in the market, along with the increasing variety of crypto assets, have led to a stronger Matthew effect in the crypto market, making it more difficult for ordinary investors to obtain market Alpha, while a very small number of Smart Money investors are reaping substantial 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 crypto investors, tracking Smart Money can help them identify market trends earlier and discover more and better investment opportunities in a timely manner, thereby achieving returns similar to Smart Money or narrowing the gap with Smart Money returns.

3. How to track Smart Money?

In the crypto market, due to the public and transparent nature of 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 made by Smart Money.

To track Smart Money, investors first need to discover and identify Smart Money. This requires investors to use blockchain explorers or third-party tools related to Smart Money, combined with their own goals and needs, to filter for Smart Money that suits them. Filtering Smart Money mainly involves analyzing their past on-chain interactions, transactions, and other on-chain information, selecting based on their transaction or interaction types, quantifiable historical performance evaluation metrics, capital flows, and interaction protocols; once Smart Money is identified, the next step is to track it. Investors can choose to fully replicate their tracking. For ordinary crypto market investors, tracking Smart Money can rely on their trades or completely replicate their investment portfolios, thereby directly benefiting from their insights and skills, achieving greater efficiency in obtaining Alpha in the crypto market.

However, it is important to note that not all Smart Money is as smart as it appears. Blindly copying all their trades without in-depth research is usually unwise, as these traders often enter the market at lower prices, while later traders are in different market conditions. Additionally, some Smart Money have multiple accounts, and the behavior of a single account may not represent the true behavior of Smart Money. It is currently still difficult to determine how many accounts a Smart Money has. A better approach is to treat tracking Smart Money strategies as an important reference dimension, combined with other indicators and analyses for investment decisions. Currently, there are many specialized tools and platforms for tracking Smart Money in the crypto market. Here, veDAO has selected 5 simple yet powerful options for everyone.

3.1. Nansen

As one of the most well-known blockchain analysis platforms for tracking Smart Money, Nansen provides a simple way to research popular projects, new trends, and important on-chain behaviors. The platform offers various free tools while allowing traders to delve deeper into 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 behavior of a large number of tagged wallets.

The Nansen Smart Money tracker provides three main pieces of information about Smart Money (or addresses) on-chain activities:

• DEX Trading: Track Smart Money's trading behavior in top DEX markets.
• Transfers and Interactions: Track all recent transfers of Smart Money and the contract protocols they interact with.
• Token Holdings: Explore the token holdings 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 trading types they are interested in.

Nansen's Smart Money tracker is currently only available to paid users, and the price is relatively high. However, Nansen does offer a 7-day free trial for $9, which can be used to assess its value to users.

3.2. Dune + Debank

Dune Analytics is a user-driven blockchain analysis platform where anyone can create their own dashboards and share them for others to use. The platform offers a wealth of community-created dashboards that users can utilize as part of their trading decisions. Through in-depth research, veDAO has identified two of the best dashboards to help users identify and track Smart Money.

A. Token God Mode Dashboard

https://dune.com/defimochi/token-god-mode

This tool was created by a user named defimochi. It allows users to find a wealth of data on specific tokens of interest, helping users identify Smart Money that may be trading that token.

By entering a token address, selecting a tracking time range (e.g., the past 30 days), and choosing the relevant blockchain, this dashboard will present a list of the top 100 trades with the highest estimated profits (along with other data). Users can then browse this list and manually filter out MEV bots to find the true Smart Money traders, i.e., those who achieve the highest trading profits.

Next, users can copy and paste their wallet addresses into DeBank, where they can learn about their current token holdings and recent trades. With this information, users can gain insights into their trading and investment strategies.

B. GMX Trader Leaderboard Dashboard

https://dune.com/adamzjw/gmx-trader-leaderboard

This dashboard was created by a user named adamzjw to identify Smart Money traders based on profitability or profit-loss ratios. Users can then input their addresses into DeBank or other portfolio tracking tools for further analysis of their on-chain behavior.

3.3. CryptoRank

CryptoRank can be used to detect recent funding trends. Although the platform does not provide real-time on-chain analysis like the aforementioned tools, 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 deeper insights into the market and understand current funding investments.

For example, the Crypto Funds and Investors feature can be used to gain insights into the investment strategies of well-known funds and angel investors. This tool allows you to browse the portfolios of numerous venture capital funds, angel investors, and independent traders to understand their current performance. Users can also see a list of recent projects and funding rounds, showing newly funded projects (and established projects) and details of the entities involved.

This can help users understand the market direction perceived by Smart Money, enabling them to make more informed investment decisions.

For a more general perspective on Smart Money in the crypto space, CryptoRank also provides various charts highlighting important data such as monthly funding changes, the most popular investment categories, and the most active funds.

3.4. Arkham

https://www.arkhamintelligence.com/

Arkham allows users to find the most profitable traders and is a relatively new on-chain analysis platform. The platform does not automatically provide Smart Money wallet addresses, requiring users to search for them themselves. The platform offers rich information that users can use to find Smart Money through some investigation. Users can easily find a list of active Smart Money traders using its trading filters and then further refine to identify currently leading traders.

For example, by filtering results to only include trades from the last hour, with a minimum value of $50,000, and limited to trades conducted by funds, users can see a list of recent large trades made by Smart Money.

Users can then browse this list to find new or established crypto assets favored by Smart Money traders or identify particularly active wallets that may require further investigation. Once a potential Smart Money is identified, users can simply click on its tag or wallet address to access a wealth of additional data, including recent profit/loss charts.

By browsing several Smart Money and comparing based on recent profitability, users can find a suitable Smart Money wallet address they wish to track. From here, users can view their current on-chain holdings, check their portfolios, or scan their recent trades to analyze their trading strategies. The official website for Arkham is:

3.5. Chainalysis

Chainalysis helps users track Smart Money behavior by tracking and analyzing transaction activities on the blockchain, providing information about market participants and investment strategies. This can help users make more informed 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 trading patterns and behaviors of Smart Money, as well as the relationships between Smart Money and specific projects or entities.

Chainalysis's platform can help users understand the investment strategies and behaviors of Smart Money, as well as their influence in the market. Users can gain insights into market trends and investment opportunities by analyzing the trading and holding situations of Smart Money.

By 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. The address for the Chainalysis platform is:

https://www.chainalysis.com/chainalysis-business-data/

In addition to the five tools mentioned above, veDAO Research Institute has also compiled several other commonly used tools to help everyone more easily find Smart Money.