One of the biggest barriers to profit in crypto is the difference in knowledge between whales and retail participants.
In part 4 of our Smart Money series we are going to share a full guide into how anyone can use Nansen to consistently generate profitable insights, leveraging the portfolios of these whales.
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🏃♂️ Acala Wins Relay Race
In Sanskrit it means “the immovable one”, and so it proved to be for Acala, as it secured the winning spot in the first Polkadot parachain auction.
We’ve been previewing these auctions for the last two months and saying how you can get involved – let’s now recap what the auctions are and what Acala has achieved:
Polkadot uses a hub and spoke model – they have a central relay chain that other projects on parachains can connect to. But to do this you need to win an auction that will then allow you to lease a slot for up to 96 weeks.
To bid in the auctions the project needs to bond (or lock up) DOT tokens for the lease period, and often uses crowdloans to fund this.
This means that approximately 32 million DOT tokens are now locked up for 96 weeks, reducing the effective circulating supply by ~3%.
Acala is a DeFi protocol hub that will allow Ethereum apps to scale to Polkadot. The team behind Acala also had success with their sister project Karura in the Kusama auctions earlier this year.
What’s interesting about bonding tokens is that it is a more concrete reduction of supply than via flexible staking. And given that Moonbeam is on course to win the second auction, the number of locked tokens will likely double.
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
Tracking Whales 101
Step 1: Asses the Macro Picture
We can use two primary pieces of data to gain macro insights into Smart Money. To find these navigate to the Nansen Smart Money dashboard and then to the Token Holdings tab.
% of Stablecoins Held in Smart Money Portfolios
Nansen.ai: 24/11/2021 % of Stablecoins in Smart Money Portfolios
We can use this data to understand how much risk the smart money segment is willing to take and therefore their market sentiment. The higher the % of stablecoins, the lower the risk smart money is willing to incur.
Currently, the proportion of stablecoins is starting a longer term uptrend, showing that smart money is starting to take less risk.
However, we recently saw a sizable decrease. This indicates that they took recent price action as an opportunity to purchase more crypto assets.
Smart Money Token Holdings
Nansen.ai: 24/11/2021 Smart Money Balance Distribution by Token
This chart shows us which coins make up the most of smart money portfolios.
Wrapped Ether continues to dominate
CRO (Crypto.com) holdings increase alongside it’s explosive price action
Matic (Polygon) has fallen out of the top 10 coins showing that smart money interest in the layer 2 solution is starting to decrease
Step 2: Asses the Micro picture
Token inflows / outflows
Nansen.ai: 24/11/2021 Smart Money Token Inflows
We can again find this data in the Token Holdings tab of the Smart Money Dashboard and shows flows of specific tokens into smart money wallets. This can be used to understand trending coins and wider narratives.
Voyager has increased by over 50% this week due to its listing on coinbase. Following the smart money would have shown an increase in their holdings, before this announcement.
Both MANA and SAND are projects related to the Metaverse. This is a trending narrative with MANA increasing by 60% in 7 days and SAND by over 100%. Again, following this data would have shown accumulation before these price movements.
Pro tip 1: Using the Token Flows feature found under the Diligence heading, Nansen can also filter for tokens created in any given time period. This allows us to see if there are new coins which the smart money segment is starting to accumulate.
Pro tip 2: We can use the Smart Money - Token Profiler feature (also found under the Diligence heading) to look at all smart money transactions and holders of a specific token.
Step 3: Finding Confluence
As with any indicator, smart money data cannot be used in isolation. Firstly, following a reliable news source is essential. This gives us an understanding of why certain token movements may be happening and can help us take advantage of the data.
We also need the skill to profit from markets. There are a huge number of elements to any successful trading system from technical analysis to psychology. To help we are releasing a free course that anyone can use to make money from crypto. Click here to check out the first episode.
Using Nansen we are able to understand the risk levels and trending narratives of those that have the most knowledge in crypto. Doing so allows us to profit from knowledge that the rest of the market does not have.
With Nansen’s On-Chain data, you can secure an edge in the crypto and NFT markets:
🤲 Exciting New Opportunities. See where funds are moving their money.
💥 Perform Due Diligence. Get more information on projects or tokens.
🌀 Defend Your Positions. Create smart alerts to track over 100 million ETH wallets.
🔥 Track The Biggest NFT Traders. See what the most profitable NFT wallets are investing in
To grow your crypto portfolio today check out the Nansen website. Currently, they are running a 7 day trial for just $9. Link here 👇
💼 Whistle While You Work In Crypto
If you speak fluent crypto, odds are you’re more of the self-funded type. If you happen to be looking for a 9-5, then you couldn’t ask for a better time for opportunities.
Citigroup recently named Puneet Singhvi, the head of digital assets. He will be tasked with building Citi’s digital asset team which will contain more than 100 new roles. Singhvi will also oversee the identification and development of products and capabilities for digital assets.
As reported by Blockworks, Visa has published 10 crypto jobs in the last 24 hours. There are currently 18 total openings in crypto at Visa, with the other eight being published on 10/29/2021.
Not only are these companies hiring, but there are many more looking for employees with crypto knowledge. When you couple these new positions with the fact that crypto raises this month alone totaled $3.6 billion, it looks like full-scale adoption is just around the corner.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.