Money Printer Issue #1: How To Track Smart Money (Whale Edition)

The Money Printer is a new newsletter focused on market strategies, opportunities, and resources in the crypto space. The first edition discusses navigating the complex world of cryptos and NFTs.

Dear readers,

Welcome to the first edition of the Money Printer, a newsletter dedicated to providing you with market strategies, opportunities, and resources to have an edge in the exciting and ever-changing world of crypto.

I have already talked about this topic on Twitter, but I know that many of you have not had the chance to read it yet.

For those of you who have already read this information, there's a small bonus awaiting you at the end of the article. So make sure you read until the end!

In this Issue, I'll cover:

• Understanding whales

• Types of whales

• Whale wallets

• Why are whales so important?

• Gaining an Edge from Whale Wallets

• Types of transactions

• Tools to track whales

• What are whales are doing

• Key points

Understanding whales and their impact

A whale is a crypto-currency term that refers to individuals or entities that hold large amounts of a cryptocurrency. Whales hold enough crypto currencies to manipulate entire markets.

Different whales have different approaches to crypto. Some Bitcoin whales own billions in $BTC, only moving Bitcoin around to cash out.

Others participate in DeFi ecosystems, small-cap gem hunting, or yield farming alongside retail investors. The bottom line is that whale wallets can dictate price, which will impact whether you end up on top of a trade or become the whale’s exit liquidity.

Here are some of the main ways whales impact the market: Market Liquidity: Due to the nature of crypto whales, their crypto wallets typically contain large amounts of crypto assets.

When whales store a huge amount of crypto assets in their wallets, it reduces the overall liquidity of that particular asset.

This happens because the number of cryptos in circulation decreases, leaving fewer coins to trade and invest.

Price Effect: Crypto whales can create high price volatility while dealing with large amounts of cryptos in a single transaction. For example, let's say a whale tries to sell Ethereum after accumulating large amounts of it.

Since liquidity is already low, selling large amounts of Ethereum would cause pressure to download Ethereum's price.

When whales throw their money away, other retail investors will also follow suit, in order to cut losses.

Types of whales

Traders: These are whales that often trade to buy and/or sell cryptocurrencies. The miners/HODLers/Early adopters: Those whales who invested at the very beginning and still own their crypto currencies or who help in securing the network via POW or STAKING.

The ''Lost'': These wallets are dead from the start, as their owners no longer have the private keys or forgotten completely about their wallet. Illegals: Whales linked to illegal activities, such as the Silk Road market.

Types of whale wallets Private wallets: These wallets are held by pseudo-anonymous individuals or organizations and contains a vast degree of cryptocurrencies.

Multi-Signature wallets: A type of cryptocurrency wallet that requires multiple signatures to approve a transaction. Multi-sig wallets are often used in corporate settings where multiple individuals or departments have a stake in the management of the holdings.

They’re also used by high-net-worth individuals who want an extra layer of security for their assets.

Protocol-Owned Wallets: These are wallets owned by the underlying blockchain protocol or network, rather than individuals.

They’re often created through a ICO. Their purpose can vary a lot, from incentivizing participants, maintenance, development and voting rights within the protocol or blockchain.

Treasury Wallets: These wallets are also often used by companies as part of their treasury management strategy. They are managed by teams of individuals within an organization and hold large amounts of cryptocurrency.

Why are whales so important?

One in three whales is an active trader in the market. If we take Bitcoin for instance, There are about 1,000 individuals who hold 40% of the market and they have the potential to manipulate currency valuations.

According to industry data, about 13% of all bitcoins, are in just over 100 individual accounts. The top 40 percent of all bitcoins are held by just under 2,500 known accounts out of a total of 100 million. You should pay attention.

Gaining an Edge from Whale Wallets

The process of looking through a blockchain explorer for insights is called on-chain analysis.

The steps for doing on-chain analysis are simple:

‣ Identify he blockchain you want to analyze

‣ Obtain the blockchain data by using a public explorer

‣ Choose analytics tool

‣ Clean and preprocess the data as raw data can be messy to work with

‣ Extract meaningful insights

‣ Interpret the results

There are several pieces of information that can be useful for tracking whale wallets:

‣ Transaction history – Provides a detailed transaction history for each wallet, which can give you an idea of the whale’s trading activity and behavior.

‣ Token holdings – Shows the token held by each wallet, which can help you determine which cryptocurrencies the whale is interested in.

‣ Contract interactions – This can provide insights into what the whale is doing with their cryptocurrencies.

‣ Address tags – Etherscan allows users to add tags to wallet addresses, which can help you identify whale wallets that have already been analyzed by others in the community.

‣ Whale alerts – These are third party services that offer whale alerts, which notify you when large transaction has occurred on the Ethereum network. They can help you track whale wallets in real-time.

By analyzing these pieces of information, you can get a better understanding of whale wallet behavior and potentially identify opportunities.

Finding a whale wallet is quite simple as blockchains are public ledgers, giving all users access into all transaction history.

All that’s needed is a quick search in a blockchain explorer for the token you are researching.

Different major blockchains have different block explorers. If you’re looking for a specific token, just search “X token + blockchain explorer” on google and you’ll be able to find the public ledger for that blockchain.

Once you go on the website, they have a tab called ‘Holders’ where you’re able to see the top holders of a particular token. That’s where you’ll find all the information regarding the holders and whales.

Notice that the rank 1, 3 and 8 are not wallets, but they’re smart contracts (Looking at the paper icon on the left). The $FTM token is used in some way by the protocol itself. In our case, we are looking at private wallets.

Once you have a couple wallets in mind, you can use a platform that allows you to keep a watchlist on whale movements and transactions. Something like Zapper or Nansen.

Types of transactions

Once you’ve found wallets you want to track from the blockchain explorer, there’s a lot of information we can extract from the transactions these whales are making.

Understanding whale transactions can tell you a lot about the sentiment of a particular whale for a token.

Here’s what to look out for: A transaction from an exchange to a wallet is usually a bullish signal. When a user usually pulls tokens off an exchange, they’re usually planning to hold the coin for a while.

When tokens move to an exchange, it’s usually a sale and can represent a bearish signal as the holder is looking to offload his tokens for liquidity.

Transactions moving stablecoins could represent either a buy soon or a transition to preserve their purchasing power for a later date, depending on the framework outlined above.

While looking at transaction history, there are always new projects and tokens to find from whale wallets. Whales often have insider information, but they can easily be wrong.

Sort out the noise as you’ll see wallets that received hundreds of transactions over the month that can be worth less than a penny. But within all that, a handful of transactions in some other coins could have predicted a coin runup.

There are always new projects and tokens to find from whale wallets. Whales often have insider information, but they can easily be wrong.

Keep in mind that these insights are simply there to supplement your conviction. Taking sentiment exclusively from whale transactions is a recipe for disaster.

Whale wallets are just one component to the market analysis required for successful crypto investing.

Tools you can use to track whales (Just to name a few):

• Nansen

• Zapper

• Apeboard

• Zerion

• @whale_alert

What are whales currently doing and buying? (Bonus)

Over the last years, whales have been heavy into yield farming. There are huge opportunities for wealth generation in defi, especially with the arrival of layer 2 solutions.

It has become a significant and effective strategy for people who already have huge amounts of money. However, be careful, as many beginner investors are better off buying and holding their tokens.

What to watch out for and Key points

What to watch out for:

•Be cautious when following whale wallets as they can sometimes be wrong.

•Yield farming requires careful attention and may not be suitable for beginner investors.

•Not all whales are experts in crypto trading.

•Whales may use multiple wallets, making it difficult to get the full picture of their holdings and outlooks on markets.

Key points:

•Whale wallets can offer insights into new projects and tokens.

•Recent transaction history can be used to track movements in and out of holdings.

•Yield farming is a significant allocation for many whale wallets.

•Whales have different challenges and strong suits that small investors, thus will trade in different ways.

•Whale wallets can provide unique insights into crypto markets and are a valuable tool when searching for small cap gems or trying to time the next big momentum shift.

Extra Bonus

Thanks for getting until the end of this edition. As a small bonus, I’ll share that Zapper might potentially have an airdrop very soon, might be worth a couple thousands.

If you’re interested, here are the steps you can take to be eligible:

https://blokdrops.medium.com/zapper-fi-massive-airdrop-part-1-50677925c543

Thank you for taking the time to read this edition of the Money Printer.

Don’t forget to share this newsletter to your friends or anyone else in the community.

Once again, thank you for your support, and I look forward to seeing you in the next edition of the Money Printer.