Following Smart Money — How you should pay attention to whale wallets.

We already covered the massive advantage of following the Macro On-Chain analysis. While the above can bring you places, combining both Micro and Macro analysis is good.

Micro analysis can sound more technical, but rest assured that it brings you impressive results.

When doing our due diligence on a project, there are simple QC checks to approve:

• Does it have strong fundamentals?
• How good is the smart contract?
• Are the whales accumulating?

Cross-checking the first two points does not mean you have found your project.
While it is true that Whales do not always time the market, following their behavior can help you gauge possible price movements.

The most powerful tool that you have is On-Chain analysis. If whales are accumulating, it is usually a positive sign.

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What would you look at?

Nowadays, setting up a smart contract with no functionalities is easy. Upwork is full of people willing to write a smart contract for you. Setting your eye on what is happening behind the scenes is crucial for your investments.

OA gives you the power to invest early in projects and play the insider game when nobody is watching. Some of you might have avoided meme coins because of your investment strategy. What if you could have taken some profit from these coins by looking at On-Chain analysis?

Take your chance and ride the early hype cycle, and then leave.

Profit is profit.

What are the things we find out by following smart money?

Rules for a successful Whale Watching strategy

• OA remains a tool. As per any other tool, you combine it with your rules and knowledge.
• Whale watching is excellent for spotting potential new projects, although you must be able to DYOR. You need to understand what makes a protocol great.
• Nansen is great at labeling exchange wallets (e.g., Coinbase) you should always filter these out.
• Learn everything about Tokenomics. You need to understand vesting schedules and unlocks of a project to avoid whale dumping on you. https://twitter.com/Blockanalia/status/1533070217122746373
• Here is another excellent thread on Tokenomics from @OnChainWizard https://onchainwizard.substack.com/p/onchain-wizard-tokenomics-thoughts?s=w
• Have at least 50 whale wallets under your radar. Let’s say 30% of the 50 whales are buying into $DEFINCI; then and only then, it might be worth to DYOR.
• Always look at how and where whales invest, accumulate, and move their funds.
• Recognize fake transactions. Scammers know you are watching big wallets and often trick you into believing your whale is buying some of their scam coins. This space is full of scams, keep your eyes open. https://twitter.com/shivsakhuja/status/1523302665588936704
• Always have your strategy set in mind. Buying meme coins early might return significant profits, although you must know when to abandon the hype train. Consider these only as mere trading profit, nothing more. https://twitter.com/DeFi_educator/status/1521275758072803336
• Know the basics of risk management, portfolio allocation and the general market sentiment. https://twitter.com/thedefiedge/status/1488193098702331913

How to get started

You have a range of tools available to help you whale watching:

Chain explorers (etherscan, for example), Nansen, Debank, or Zapper are good allies for following smart money. While etherscan is a great tool, it isn’t helpful to aggregate data for multiple transactions.

This is where Nansen and tools like Debank or Zapper come into play.

• Nansen

Nansen is a two-way tool where you can both follow single tokens or whales. Their “Smart Money” function is a database of almost 4000 balances in the ETH network.

Tracked wallets include many whales, investment funds, and past good performers. As per good performers, we refer to those who have generated significant P&L recently and have identified early opportunities. Whether in staking, liquidity providing, trading, or NFT minting, the profit area has no distinction.

In the Smart Money section, we usually focus on Transactions and Token Holdings with 7D as the timeframe.

As per practicality and because we own a subscription, we will use Nansen paired with excel to have our list of wallets to track.

This part of the Smart Money tool shows you the most significant change by volume of $USD per token. You have three different timeframes in the same window, which help understand if smart money has been dumping/buying this token for a while.

Combining everything with Nansen Token God Mode gives you enough room to research. You want to identify the last events happening over the past weeks and months and filter by the biggest transaction. Token God Mode is “The feature” in Nansen. You can see everything: last movements, holder distribution, smart money holdings, and top transactions.

This first part helps you find whales through significant movements in token holdings. Yet, you can also find whales via the Transactions tool.

In the above pic, we can see that in the last 24hrs we had quite some movements. We selected just one wallet and decided to dive deep. One by one you quickly understand the differences between VC wallets, whales, DeFi geeks, and so on.

So we copy his wallet address and paste it straight into debank.com.
(For reference) 0x777999be819ffecee44a995560a9d0e97780a30c

The user currently holds around $16M US Dollars in assets spread across different DeFi protocols. Have we found a whale? Yes, although could this enter our 50 lists of whales to watch? Probably.

Although this whale isn’t farming any unknown project, it could be interesting to keep track of any future moves. Pay close attention to the “History” tab on each wallet you inspect in debank; it can reveal buys and sell to add to your watchlist.

Keep track of how much percentage they allocate to a project based on the size of the relative portfolio. And pay close attention to scam transactions as we mentioned before.

Combine previous buys with their relative price to see if they spotted early winners or made good trades. Little by little, build your rank to judge wallets like this and assign a priority to each of them in your list of 50.

As per every other whale, farming right now (given the current market condition) could be your safest bet. So it is also essential to understand in which phase of the market we are.

Blockchain explorers

Blockchain explorers are a must to learn if your wish is to get good at following smart money. Some wallets might be invisible to Nansen’s eyes, so you’d instead look with your own eyes and spot some.

https://twitter.com/CroissantEth/status/1512929465076264971

We won’t confuse you with pics on blockchain explorers but instead, spark your curiosity and a more thoughtful process.

Think of a project that went vertical at some point; who made bank on that trade?

Blockchain explorer comes in help when scouting first transactions and first buyers. You find whales with massive buys who made an insane profit. Who are these whales?

The on-chain analysis offers you unique opportunities far from the average CT shiller and all made with your conviction and eyes.

Conclusion

Most of the time, you can find wallets that have participated in the seed round, see with who that wallet is interacting, and dig deeper, as always build your mental map and convictions.

Whales don’t always sell all at once; they need liquidity for that. That is why frontrunning them is crucial because you can exit the market more easily with a smaller position.

Don’t follow blindly every movement; smart money are smart but not always right. Everyone makes mistakes.

As always, combine the right tools, and you can’t go wrong.