Navigate the complex crypto universe by learning how to follow the trail of smart money and make informed decisions!
TL;DR:
- Cryptocurrency trading is challenging due to the large number of cryptocurrencies and their volatility.
- "Smart money" refers to experienced traders or institutions with insights and resources.
- Tracking smart money can provide an edge in the market, but careful analysis is necessary.
- Platforms like Nansen, Dune Analytics + DeBank, CryptoRank and Arkham offer tools to track and analyze smart money activity.
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Introduction
Given the sheer number of cryptocurrencies, their typical extreme volatility, and the mind-boggling number of variables to consider, cryptocurrency trading can be considered one of the most challenging pastimes.
Nonetheless, this doesn’t stop the more than 30 million traders worldwide from attempting to beat the market and turn trading into a profitable venture — whether as a hobby or career.
To maximize their chance of making profitable trading decisions, traders typically leverage various indicators, strategies and tools to spot opportunities and capitalize on them.
A small but growing fraction, however, choose to offload part or all of their decision-making processes to the experts by following so-called “smart money”.
Why Track Smart Money?
"Smart money" is a term used to describe the investments made by individuals or institutions who are considered to have expert knowledge, a deep understanding of the market, and proprietary tools for spotting trends and opportunities.
These entities often have access to information and resources that aren't readily available to the average trader, potentially giving them an edge in the cryptocurrency market — which suffers from heavy information asymmetry.
By following smart money, you can potentially piggyback on their trades or copy their portfolios entirely, allowing you to directly benefit from their insights and skill.
That being said, it’s important to note that not all smart money is as smart as it seems. It’s generally not wise to copy all of their trades 1:1 without further research — since these traders often enter at a lower price than later traders and under different market conditions.
Today, there are a large number of platforms that can be used to track smart money in various ways. Here, we take a look at four simple but powerful options.
Nansen: Track Labelled Smart Money Activity
One of the best-known blockchain analytics platforms, Nansen provides a simple way to research hot projects, new trends and important on-chain activity.
The platform provides a variety of free-to-use tools that help to highlight important activity and data while allowing traders to research individual projects, smart contracts and wallets in greater depth.
But its most relevant feature is aptly named 'Smart Money' and as its name suggests, it allows you to track what a large number of labeled wallets have been doing on-chain.
The Smart Money tracker provides three main types of information about their on-chain activity:
- DEX Trades: Track the most popular DEX markets among smart money
- Transactions: Track recent smart money transactions and the contracts they interact with
- Token Holdings: Explore the token holdings of smart money and a leaderboard of their profitability
Importantly, Nansen’s smart money tracker allows you to filter smart money addresses to include only specific types — such as funds, smart DEX traders, airdrop pros, smart NFT traders and more. This can help you refine your search to include trade types you’re more interested in replicating.
Nansen's Smart Money tracker is currently only available to paying users and is rather expensive. That said, Nansen does offer a 7-day free trial for $9, which can be used to gauge its value for you.
Dune Analytics + DeBank
Dune Analytics is a people-powered blockchain analytics platform that allows anybody to create their own dashboards and make them available for others to use.
The platform provides a huge number of community-created dashboards you can leverage as part of your trade decisions.
Though you could spend all day finding useful data on the platform, we’ve found two dashboards that can help you identify and track smart money.
First is the Token God Mode dashboard by defimochi. The tool allows you to look up a wealth of data about a specific token you’re interested in — helping you find smart money that may be trading the token.
By entering a token address, selecting a tracking timeframe (e.g. past 30 days), and choosing the relevant chain, the dashboard will pull up a list of the top 100 trades by estimated profit (among other data). You can then scan through this list and manually filter the MEV bots to find the genuine smart money traders — i.e. those that traded the token with the maximum profit.
You can then copy their wallet address and paste it into DeBank, where you can get an overview of their current token holdings, as well as their most recent trades. From this, you can potentially glean their trading and investment strategy.
Alternatively, use adamzjw's GMX Trader Leaderboard dashboard to spot smart money traders by profitability or profit/loss ratio on GMX. You can then feed their address(es) into DeBank or another portfolio tracker to further analyze their on-chain behavior.
CryptoRank: Check Recent Funding Trends
Though it doesn’t provide immediate on-chain analytics like the other options on this list, CryptoRank provides a treasure trove of data that can be used to tease out new trends and opportunities.
The platform offers a variety of tools and trackers that help users take a deeper look into the market to see how money is currently being invested.
CryptoRank provides a powerful feature, known as Crypto Funds and Investors, that can be used to gain insight into the investment strategies of prominent funds and angel investors.
This tool allows you to browse the portfolios of a huge number of VC funds, angels and independent traders to see how they are currently performing. You can also see a list of the most recent projects and the most recent funding rounds — showing which new (and established) projects recently received funding and detailing the entities that participated.
This can help you glean insights about where the smart money believes the market is headed, enabling you to make more informed investment decisions.
For a more generic view of how smart money is moving in the crypto space, CryptoRank also provides a variety of charts, highlighting important data like the change in month-on-month funding, the most popular investment categories, and the most prolific funds.
Arkham: Find the Most Profitable Traders
Despite being a relatively new on-chain analytics platform, Arkham is quickly growing in popularity, thanks to its flexibility and modularity.
Though the platform doesn’t automatically serve up smart money wallets like some other options on this list, it does provide a wealth of information if you already have a target in mind, and can be used to find smart wallets with a bit of sleuthing.
Through some clever use of its transaction filter, you easily find a list of active smart money traders, and then further refine this to identify those that are currently ahead of the curve.
For example, by filtering results to only those in the last hour, with a minimum value of $50,000, and only those made by funds, you can see a list of the most recent large trades made by smart money.
You can then scan through this list to find popular new or established cryptocurrencies among smart money traders or identify particularly prolific wallets that may warrant further investigation.
After identifying a potentially interesting entity, you can then simply click on its label or wallet address to pull up a heap of additional data — including its recent profit/loss chart.
By scanning through several entities and comparing them based on recent profitability, you may be able to identify a suitable smart wallet to copy. From here, you can take a look at their current on-chain holdings to check their portfolio or scan their recent transactions to analyze their trading strategy.
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