Following Smart Money with Whale Wallets

What is a Whale Wallet?

To invest successfully in crypto, you must understand whale wallets. These mysterious and anonymous market participants affect decentralized economies in massive ways. Quietly floating through crypto markets, they are infrequently observed, but have a massive impact on these digital ecosystems.

Whales are loosely defined as anyone with a ‘large’ amount of crypto assets. Large hedge funds and investment groups such as Pantera Capital and Greyscale Investments are notable names that have been accumulating Bitcoin (and other cryptos) for quite some time now, but the typical whale is a private and anonymous multi-million dollar investor.

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.

Types of Whale Wallets

Private Wallets: can be either wallets owned by an institution/fund mentioned above, or by individuals. This is a great place find relevant market sentiment, and can be a good glimpse of what ‘smart money’ is doing in crypto.

Multi-Signature Wallets: require some portion (or all) of the wallet owners to sign a transaction before it is executed. This is a safety feature and is used to safeguard funds and prevent a single bad actor to run off with funds.

Protocol-Owned Wallets: often contain the largest allocation of a specific token. These smart contract wallets hold tokens for a number of reasons. Protocol-owned wallets can hold funds temporarily, hold tokens that are being staked, or perform token buybacks.

Treasury Wallets: are a type of protocol-owned wallet where liquid funds are held for big projects and protocols. Treasury wallet addresses are typically held in developer documentation and allow you to track exactly where the tokens come from and where they go.

Why are Whale Wallets Important?

Identifying the big players in a specific token and keeping an eye out for what they are doing can give you insight into that token’s future. Being a successful retail investor in crypto is simply about finding a sustainable (and replicable) edge over others in the market. Tracking whale wallets is one of the ways to create your own alpha.

As mentioned above, the importance of whale wallets cannot be overstated. No amount of technical or fundamental analysis can predict the price movement caused from a sudden whale transaction. Adding whale wallet monitoring to any trading strategy will help create more conviction, whether it be positive or negative, and allow for more informed decision making, something that is vital as the trend of “herd mentality” continues to grow in the crypto markets.

Gaining an Edge from Whale Wallets

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, but the following are popular examples for big blockchains:

If you’re looking for a specific token, just search “X token + blockchain explorer” to find the public ledger for that asset. Websites like Etherscan.io have a token “holders” tab which will automatically organize by position size.

To look at an example, here is the distribution of $SPELL token:


Note that the first five wallet addresses are actually smart contracts, where $SPELL is in some way used by the protocol itself. We are looking for private wallets in this case, as those are the wallets that have trading activity we can check out to gain insight.

Another way to find whale wallets is through transaction analytics companies and ‘whale watcher’ social media accounts and. The twitter account Whale Alert aggregates transactions through their public API and will tweet any transaction greater than $1 million USD.

Once you have a couple wallets in mind for the tokens you like to follow, use a platform that allows you to keep a watchlist to keep update on whale movements (we like zapper.fi).

Types of Transactions

Let’s take a closer look into how we can read these transactions from big players.

The first thing to look for is the type of transaction being made with the wallet. This will allow you to understand the whale’s sentiment for the specific token or market as a whole.

In the pictured tweet above, we see a transaction from an exchange to a wallet. This a bullish signal as when users pull tokens off an exchange, they typically plan to hold for a while. When tokens move onto an exchange, it represents a likely sale and could be a bearish signal.

Additionally, transactions moving stablecoins could represent either a buy in the near future or a transition to preserve their purchasing power for a later date, depending on the framework outlined above.

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.

Five Whale Wallets To Watch

Below are five multi-million dollar Ethereum wallets that we like to watch:

Some points to take away:

• There are always new projects and tokens to find from whale wallets. Whales often have insider information and can frequently bet small chunks of their portfolio for massive gains. But they can easily be wrong: keep that in mind before thinking that $2 million allocation to $MUSH, which is actually .5% of their portfolio, is the next 100x. Respect the elders, but practice caution.

• Look at recent transaction history. Zapper.fi will show most tokens from most blockchains. Are recent transactions trading out of current holdings and moving to stables? A quick scroll through 7d97’s history shows all recent transactions on Fantom network, with a pretty sizable stablecoin yield farming position in 3pool on Curve. Maybe they’re bullish on Fantom, but holding stablecoins for a drawdown.

• Sort out the noise. Wallet 00a4 has received hundreds of transactions over the past month that are worth less than a penny. But within all of that, a handful of transactions in $CRV and $CVX predicted the runup.

Yield Farming is a significant allocation of all these whale wallets. With more capital, yield farming becomes a more effective strategy. But keep in mind it requires careful attention, and many beginner investors are better off with buy-and-hold strategies

What to Watch Out For

Mentioned throughout the discussion above, there are a handful of things to be wary of when following wallets. Not all whales are all-knowing crypto megabrain geniuses. Although there is significant money stacked in these wallets, trying to trade exclusively based on moves made by these whales will not put you in a position to succeed.

Often, whales use multiple wallets so you will never get a full picture of their holdings and their outlook on markets. Whales have different challenges and strong suits than small investors, and thus will trade in different ways.

Regardless, whale wallets can provide unique insight into crypto markets, and are another vital component to add to your arsenal when hunting for small cap gems or trying to time the next big momentum shift.

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