Smart money (SmarQ Money) has always been the focus of attention in the crypto market. The smart money tracking strategy based on this can indeed provide lucrative returns for ordinary crypto investors. The actual situation in the crypto market is that the proportion of investors using crypto trading indicators, strategies and tools based on smart money is also gradually increasing. Next, the senior will lead everyone to understand the smart money in the crypto market and how to track them?
1. What is smart money?
Smart money refers to professional investment institutions or individual investors in the crypto market that have outstanding investment research capabilities and information advantages. They have rich trading experience and excellent historical performance, generally have relatively large amounts of capital, mature investment concepts, and a more comprehensive and thorough understanding of the crypto market than ordinary investors. The dynamics of smart money have special significance for ordinary crypto market investors.
Why follow the smart money?
The high volatility Q of crypto assets and the serious information asymmetry in the market, as well as the increasing number of crypto assets and the stronger Matthew effect in the crypto market, make it more difficult for ordinary investors to obtain the market's Alha, while a very small number of smart money are making a lot of money. This is because smart money can obtain information and resources that ordinary traders cannot easily obtain, which gives them an advantage in the cryptocurrency market. For ordinary crypto investors, tracking smart money in the crypto market can identify market trends earlier, discover more and better investment opportunities in a timely manner, and obtain the same returns as smart money or narrow the gap with smart money returns.
3. How to track smart money?
In the crypto market, due to the open and transparent nature of blockchain, users can view every transaction conducted on the blockchain. After processing and screening the data, transactions conducted by smart money can be identified both in theory and practice.
To track smart money, you first need to discover and find smart money. This requires investors to use blockchain browsers or third-party tools related to smart money, combined with their own goals and needs, to screen smart money that suits them. Screening smart money is mainly based on its on-chain interactions, transactions and other on-chain information, and selection is based on its transaction or transaction type, quantitative historical performance evaluation indicators, capital flow and transaction protocols and other behavioral patterns; secondly, after finding smart money, the next step is to track smart money, and you can choose to completely copy and track. For ordinary crypto market investors tracking smart money, they can rely on their transactions or completely copy their portfolios, thereby directly benefiting from their insights and skills, so as to achieve twice the result with half the effort in trading and obtain the alpha of the crypto market more efficiently.
But it should be noted that not all smart money is as smart as it seems. It is usually unwise to blindly copy all their trades without in-depth research, because these traders often enter the market at a lower price, while later traders are in different market conditions. At the same time, some smart money has multiple accounts. The behavior of a single account does not represent the true behavior of smart money. It is currently difficult to determine how many accounts a smart money has. A better approach is to use tracking smart money strategies as an important reference dimension and combine other indicators and analysis to make investment decisions. At present, there are many tool platforms dedicated to tracking smart money in the crypto market. Here I recommend a simple but powerful option.
As one of the most well-known blockchain tracking smart money, 3dogs.io provides an easy way to study hot projects, new trends and important on-chain behaviors. The platform provides free tracking tools, one-click smart wallets on the chain, and an anti-fraud automatic detection system, which allows you to track the behavior of a large number of tagged wallets on the chain.
