Market Makers in Crypto Trading: How They Create an Efficient Market

Liquidity in cryptocurrency trading is the oxygen of the market. Without market makers providing continuous trading volume, traders would face wide spreads, sharp price jumps, and an inability to quickly close large positions. Market makers operate in the shadows, but their influence on the stability and accessibility of crypto markets is undeniable.

The essence of market making: who are these players?

A market maker is not just an active trader. It is a specialized market participant (a trader, firm, or financial institution) that places simultaneous buy and sell orders for the same asset, constantly providing counterparties for other trading participants.

The main difference between a market maker and an ordinary trader: profit is not earned from guessing the price direction, but from the spread — the difference between the buy price (bid) and the sell price (ask). A trader may wait for a profit from a price increase, but a market maker earns on every transaction, regardless of whether the market moves up or down.

Today, large financial institutions, hedge funds, and specialized trading firms dominate market making. However, retail traders also participate in this process by placing limit orders on exchanges on a smaller scale.

How it works: how market makers support the market

Let’s consider a specific example with Bitcoin (BTC). Suppose the current market price of BTC is $87,340 (data as of 2025-12-26). A market maker might place:

• A buy order for BTC at $87,320
• A sell order for BTC at $87,360

The spread becomes their potential profit for each buy-sell cycle.

$40 Four-step process of market making

Step 1: Two-sided quotes
The market maker constantly offers both sides of the market. This guarantees that the order book always has bids and asks. A trader wanting to enter a position never remains without a counterparty.

Step 2: Fast execution
When the market taker accepts the market maker’s offer ###buys at $87,360 or sells at $87,320(, the position is immediately executed. The market maker instantly places new orders, maintaining liquidity.

Step 3: Accumulating micro-gains
Through thousands of transactions during the day, these small spreads turn into significant income. High-frequency trading algorithms enable hundreds or thousands of trades per second, scaling profits.

Step 4: Position management and hedging
Market makers do not just trade on one exchange. They hedge their positions across multiple platforms, minimizing the impact of price fluctuations. If they accumulate excess BTC on one exchange, they can sell it on another, neutralizing risk.

) Behind-the-scenes technology

Modern market makers use complex high-frequency trading algorithms ###HFT( that:

• Analyze order book depth in real time
• Adjust spreads depending on volatility
• Predict order flows and proactively adjust positions
• Execute thousands of operations in milliseconds

Without this automation, market making would be impossible at the scale of the modern crypto market.

Market makers vs. market takers: two poles of trading

These two categories of participants create an ecosystem where each plays an indispensable role.

Market makers add liquidity:

• Place limit orders and wait for execution
• Earn from the spread, not from predicting price direction
• Ensure constant availability of counterparties

Market takers consume liquidity:

• Execute orders at the current market price immediately
• Pay the spread )the difference between the best bid/ask and the execution price(
• Generate trading activity and volumes

Interaction example: a market maker places a sell order for BTC at $87,360. A speculator )a market-taker(, believing the price will fall, immediately buys at this price, closing the market maker’s position and simultaneously taking a market opposite position.

A healthy balance between makers and takers creates conditions for narrow spreads, high order book depth, and low transaction costs for all participants.

Leading crypto industry market makers in 2025

Several major players dominate the liquidity provision for crypto assets.

) Wintermute: multi-exchange liquidity powerhouse

Wintermute is a flagship algo trading firm managing approximately ###millions in assets as of February 2025. The company works with over 300 on-chain assets across 30+ blockchains and services 50+ crypto exchanges. As of November 2024, total trading volume exceeds $237 trillions.

Strengths: coverage of both CEX and DEX; advanced algorithmic systems; proven reputation.

Limitations: less focused on niche altcoins; may be unavailable for early-stage projects.

$6 GSR: deep experience and diversification

GSR has been operating in crypto markets for over ten years, providing market making, OTC trading, and derivatives services. As of February 2025, the firm has invested in over 100 protocols and Web3 companies, operating on 60+ exchanges.

Strengths: focus on launching new tokens; comprehensive service suite; long-term partnerships.

Limitations: mainly oriented toward large projects and institutional traders; services are expensive for small businesses.

Amber Group: capital management and institutional focus

Amber manages trading capital of about $1.5 billion for 2000+ institutional clients. Total trading volume on connected exchanges exceeds ###trillion as of February 2025.

Strengths: AI-based technologies; comprehensive risk management; strong compliance focus.

Limitations: high entry threshold; better suited for mature projects than startups.

$1 Keyrock: algorithmic specialization

Keyrock processes over 550,000 trades daily across 1,300+ markets and 85 exchanges. Founded in 2017, the company offers market making, OTC, options services, and liquidity pool management.

Strengths: optimized algorithms; tailored solutions; data-driven approach.

Limitations: smaller scale compared to giants; less known; may require premium fees.

DWF Labs: investments and liquidity in one package

DWF Labs manages a portfolio of 700+ projects, supporting over 20% of the top-100 and 35% of the top-1000 projects on CoinMarketCap. It operates on 60+ leading crypto exchanges, trading both spot and derivatives.

Strengths: support for early-stage projects; competitive OTC solutions; active investment activities.

Limitations: only works with tier-1 projects; strict selection procedures.

All these firms utilize advanced algorithms, deep analytics, and modern technologies to optimize liquidity and minimize trading inefficiencies.

Why market makers are critical to exchange health

1. Explosive liquidity growth

Market makers provide sufficient order volume so that even large purchases or sales do not cause extreme price movements. Without them, trying to buy 10 BTC in a low-liquidity pair could send the price soaring.

2. Dampening volatility

In the 24/7 crypto market, market makers act as shock absorbers. During panics, they support buy demand; during rallies, they actively offer sales, preventing extreme spikes.

3. Fair price discovery

Constant two-sided quotes from market makers help ensure prices reflect real supply and demand, not speculation or errors in illiquid markets.

4. Narrow spreads = low costs

Competition among market makers narrows spreads. Traders pay lower fees and get better execution prices.

5. Attracting volumes and revenues

Liquid markets attract both retail and institutional traders, increasing trading volumes and exchange commissions. New token listings often require market maker support for immediate liquidity.

Risks for market makers: the dark side

Despite their importance, market makers face serious challenges.

Volatility as the main enemy

Crypto markets are known for their unpredictability. If the price moves sharply ###for example, a sudden drop in BTC from $87,340 to $80,000 within hours(, a market maker may not have time to adjust orders and will incur losses.

) Inventory risk ###holding positions(

Market makers hold large volumes of cryptocurrencies. If the value of assets they hold drops sharply, their balance can suffer. This is especially dangerous with low-liquidity altcoins.

) Technology failures

HFT algorithmic systems require absolute reliability. Technical errors, execution delays, or cyberattacks can lead to losses or inability to adjust positions.

Regulatory uncertainty

In different countries, market making is regulated differently. Sudden legislative changes, classification of activities as market manipulation, or strict compliance requirements can seriously impact market maker operations globally.

Conclusion: market makers as the backbone of crypto trading

Market makers are the invisible force ensuring the proper functioning of cryptocurrency markets. They solve the fundamental liquidity problem, allowing traders to enter and exit positions with minimal costs and without fear of sharp price jumps.

As the crypto ecosystem develops, the role of market makers becomes even more critical. Their presence not only stabilizes prices but also attracts new participants, fostering market maturity and transparency.

However, market makers are also exposed to serious risks — from volatility and technological failures to regulatory threats. Successful market makers are those who can balance micro-profit extraction with long-term risk management.

A crypto market without market makers would be chaotic and inaccessible. With them, it becomes dynamic, fair, and open to all.