Unfortunately, access to information in crypto is not always equal. Parties that are heavily involved in the space such as funds and whales are often aware of what will happen before it does, helping them beat the market.
Fortunately, with Nansen.ai you can also benefit from their insider knowledge. To help, we will be sharing insights into this “Smart Money” once a week for the next month.
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🐴 Stable Buoy
When Janet started Yellen this summer about the dangers of stablecoins, the President’s Working Group on Financial Markets (PWG) got to work.
With the report issued on Monday, let’s see what the recommendations were:
The main concerns were about investor protection and market integrity, especially since stablecoin supply has increased by more than 500% in the last 12 months.
The report recommends limiting who can issue stablecoins and restricting them to “Insured depository institutions” that will be supervised and regulated.
However, legislation is slow, especially in crypto, and so for now the report suggests use of existing authorities to cover oversight gaps. In particular the Securities & Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC)
Interestingly, a number of stablecoin issuers were also consulted for the report iIncluding Tether, Circle, BlockFi, Coinbase and Gemini who generally accept regulation will come and want to see clarity as soon as possible.
With Coinbase publishing a general proposal for regulating cryptocurrency last month, the issue of this report highlights the contrasting speeds with which different parties want to move. As individuals we can only consider the potential impact of having all of our eggs in one basket…
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.
Smart Money Portfolios: Risk On or Risk Off?
First let’s consider who we will be targeting. This will be any “Smart Money” segments labelled on Nansen and this is made up of categories such as whales (wallets that are in the top 100 when sorted by balance of Eth) and funds (entities such as Alameda Research or Three Arrows Capital that invest in the space). A full list of these can be found here.
Now let’s dive into the insights themselves. Today we will look at the % of stablecoins that these smart money segments hold in their portfolios.
The lower the %, the more risk smart money is willing to take on and the more positive their sentiment towards price.
To find this information with Nansen, navigate to the Smart Money dashboard and click on the Token Holdings tab.
This chart reveals something interesting: currently the % of stablecoin exposure is on a downward trend, indicating that smart money is becoming increasingly risk-on.
As always we should question how valid our data is.
To do so, let's look at historical information to understand whether this indicator could have helped us in the past:
Starting on 15th July 2021, smart money started reducing risk significantly.
Looking at BTC price data, this coincided with the first major bounce after the drop from previous all-time highs and this exact date reflected the highest BTC price for over 1.5 months.
Similarly during the period of 13th July - 21st July, smart money started to increase their risk levels. This period represented levels close to the bottom, before an 80% price increase during the following month.
Whilst we should never rely on one indicator alone, the % of stablecoins held by smart money portfolios can be a fantastic data point to act as confluence with our systems. Using Nansen we are able to get this data and understand how much risk the biggest players in the space are willing to take on alongside their sentiment towards price.
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.
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To grow your crypto portfolio today check out the Nansen website. Currently, they are running a 7 day trial for just $9. Link here 👇
⛱️ Playing in the Sandbox
The Sandbox is a virtual world, where players can design & build games and in-game assets. It is built on the Ethereum blockchain and SAND is the utility token of the platform.
SAND holders can exercise voting rights on key elements of the platform and participate in governance decisions via DAO mechanisms.
SAND can be staked to earn passive revenue on LANDS.
5% of all transaction volume in SAND will be allocated to the staking pool and the Foundation equally to support the ecosystem.
Three products will make up the ecosystem of user-generated content.
1️⃣ The Voxel Editor allows you to create voxel models and animate them quickly.
2️⃣ The Marketplace is located on the main dashboard where you can buy & sell the tokenized in-game assets. These are created using the ERC-1155 standard.
3️⃣ The Game Maker allows you to build, share & monetize your own project on the online 3D gaming platform.
Inside the metaverse you can buy, rent or populate LANDS, increasing the value. LANDS are an ERC-721 NFT. GEMS are tokens that are required to create scarce assets and are burned when used. You must be staking SAND to earn GEMS.
Nexo is one of the most user-friendly crypto lending and earning platforms in the industry. Unlock the Power of Your Crypto:
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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.