Tracking from wallets to outperform the market: Five steps to using on-chain tools to catch smart money movements

Bitcoin’s price on the Gate exchange was temporarily reported at $70,551.63 on February 9, 2026, demonstrating resilience amid intense market volatility. Meanwhile, the trading price of MEME coin Pepe (PEPE) is $0.00000377, as the market searches for direction amid complex sentiment.

The market is always dominated by two types of people: followers and leaders. The former only realize after the price chart has formed, while the latter have already positioned themselves before the price movement begins. The latter, often called “Smart Money,” leave on-chain footprints that are the key to decoding the market’s next move.

Definition of Smart Money

Smart Money refers to wallet addresses that consistently and stably profit through trading on the blockchain. These may be professional trading teams, core project contributors, or institutions with informational advantages.

Their core characteristics are: always discovering value ahead of the market, precisely timing buy and sell points, and maintaining verifiable profit records far above average.

Unlike luck or risky gambling, the operations of Smart Money have inherent logical analysis and learnability. Their methods of building positions, timing choices, and risk management discipline leave clear on-chain data for us to study.

Core Five-Step Screening Method

Win rate is the fundamental threshold for evaluation. A smart money address worth tracking should have a historical trading win rate stably above 60%. The win rate formula is: number of profitable trades ÷ total trades × 100%.

True profitability is guaranteed by the risk-reward ratio. A wallet with a risk-reward ratio ≥ 2:1 means the average profit per trade is twice the average loss. Even with a win rate of only 45%, long-term stable profits are achievable.

Trading frequency reveals operational style. Low-frequency traders (< 5 trades per week) usually adopt long-term strategies; medium-frequency traders (5-30 trades per week) are suitable for most followers to learn from; high-frequency traders (> 30 trades per week) involve higher Gas costs and professional equipment, not suitable for ordinary users to blindly follow.

Wallets with a capital scale between 10 and 100 SOL (or equivalent assets) typically have both flexibility and some market influence, making them ideal observation targets. Also, observe their position management—high-quality wallets rarely have single trades exceeding 10-20% of total funds.

Analyzing the quality of tokens bought in their historical trades is crucial. Good signals include: entering early in token launches (top 10% buyers), successfully avoiding “whale trap” projects, and choosing tokens with sufficient liquidity. Dangerous signals include frequent participation in fraudulent projects or blindly chasing high prices.

Practical Tools and Data Interpretation

On the Solana chain, Dex Screener is a key tool for observing real-time trades and identifying early hot tokens. Setting 1-minute candlesticks allows precise pinpointing of large buy-in moments, enabling us to trace back and find the wallet address initiating the trades.

Platforms like Nansen, Birdeye, Arkham offer macro-level smart money tracking features. They can label addresses belonging to institutions, funds, or well-known traders, and monitor their fund flows in real-time with alerts.

For example, a well-known trader address called “Sunday Funday” recently identified a seemingly failed token initiated by a crypto artist. The trader decisively invested 13 SOL. The token’s market cap then soared to $20 million, yielding nearly a thousandfold return on paper.

Cross-verification of data is essential. When a wallet builds a position in a token, immediately check its entire historical holdings and transactions via Etherscan or Solscan to verify whether its operations are consistent or just an isolated speculative move.

Timing and Narrative Integration

On February 9, 2026, the emerging regulated stablecoin USAT maintained a price around $1.00. This asset, supported by the “Genius Act” framework emphasizing compliance, is attracting smart money seeking safety and stability narratives.

Although the market daily sees countless new tokens, smart money rarely blindly “mints new.” They prefer to deeply research the narrative behind projects, team backgrounds, and community quality. For example, some smart money quietly accumulated positions two months before the GME token’s cultural narrative reboot, ultimately gaining dozens of times returns.

Smart traders not only track buys but also monitor “unrealized gains.” Using tools to see which addresses hold large unrealized profits while still holding firm can reveal positive information that the market has not yet widely recognized.

Tools like Moby’s “Whale Watch” allow setting alerts for address movements. When whale wallets start transferring funds en masse from one sector (e.g., DeFi) to another (e.g., AI concept tokens), it often signals a market rotation ahead.

Building a Continuous Tracking System

Create your own “Smart Money Watchlist.” Record the high-quality addresses filtered through the five-step method, and periodically (e.g., weekly) review their recent activities to see if their strategies have changed.

When recording, note not only the address but also your core reasoning, e.g., “Address A, win rate 65%, risk-reward ratio 2.5:1, specializes in early discovery of Solana ecosystem AI tools, recently active on Gate new tokens.”

Markets evolve, and so do smart money strategies. Keep learning, stay updated with on-chain data analysis communities, and continuously refine your filtering criteria.

For example, some advanced discussions point out that certain whale buy-ins are sometimes aimed at attracting market FOMO, creating favorable conditions for their positions in perpetual contracts and derivatives markets. Recognizing such complex strategies requires deeper analysis.

Summary

While the market’s attention remains on Bitcoin at the $70,000 level, a smart wallet may already be eyeing the next narrative starting point. By tracking this wallet’s trades on Gate exchange pairs, we can clearly see that before the market rally, it had already completed initial positioning in a new sector token.

On-chain data does not lie, but it requires the right tools and systematic methods to interpret. In this transparent yet noisy forest, the footprints of smart money are the clearest markers illuminating the way forward.