Identifying Hot Tokens – Part 1
Market Meditations | February 9, 2022
Step 1: Look at Changes in Smart Money Token Holdings
This table shows the flow of tokens into Smart Money wallet addresses and is a good way to spot what the most successful investors are currently doing with their assets.
Nansen.ai: 09/02/2022 – Smart Money Token Holdings (sorted by Change Over 1 Day)
In our example:
- Most of the top tokens are stablecoins. This often shows that Smart Money is becoming risk off or that there are good yield farming opportunities on those specific stablecoins.
- SAND is the token for metaverse gaming project The Sandbox.
- BTRFLY is the token behind Redacted Cartel – a project looking to combine the popular DeFi protocols, Convex and Olympus DAO.
We have now found two potential opportunities that we can dive deeper into.
Step 2: Navigate the Data to Find Even More Opportunities
Looking at positive changes to Smart Money token holdings is only one way we can discover new opportunities. To gain even more actionable insights we can:
- Sort by outflows to see if Smart Money is exiting certain coins.
- Sort by time frame to find opportunities that fit your strategies.
- Filter by smart money segments. For example the Smart Liquidity Provider category will focus on DeFi coins however Smart NFT Money categories will focus on NFT coins.
- Use the “Token Flows” feature to filter by token age. This allows us to focus on newer coins where there may be higher rewards at the cost of greater risk.
Reminder: At this stage we have not done any due diligence on these tokens. We are therefore not ready to make an investment with this information alone.
This week we have shown how you can use Nansen to identify hot tokens by considering the activity of the most successful crypto investors. We have then also shown how to tailor this information to focus on any sector where you may have your own alpha, whether this is NFT’s or DeFi.