Creating a Cryptocurrency Market: The Stabilizers for Trading

Why Does the Cryptocurrency Market Need Market Makers?

Imagine you want to sell (BTC) but no one wants to buy. Or vice versa, you’re eager to buy but the price keeps jumping. That’s exactly what the world would look like without a Market Maker (Market Maker).

Unlike traditional stock markets that close at night, the cryptocurrency market operates 24/7 without stopping. Market makers are the ones who never sleep, continuously maintaining this stability. They place both buy and sell orders at different price levels, forming a liquidity network that covers the market day and night.

Without market makers, traders would face:

• Excessive spreads: The gap between bid and ask prices can be many times wider
• High volatility: A small order can shake the entire market
• Difficulty executing large orders: Entering or exiting positions without ready trading partners

Market makers not only provide liquidity—they are the backbone of trust and efficiency in the entire crypto trading ecosystem.

How Do Market Makers Operate?

Profit-Making Methods

Most regular traders aim to buy low and sell high for profit. But market makers are different—they earn from the spread between buy and sell prices.

Illustrative example: A market maker might place a buy order for Bitcoin (BTC) at $100,000 and simultaneously place a sell order at $100,010. The $10 spread$10 is their profit each time a trade is matched. Although ###not much, when multiplied by thousands of trades daily, the accumulated profit becomes significant.

Continuous Operation Process

When a trader accepts the $100,010 sell price and buys Bitcoin, the market maker will immediately:

1. Sell Bitcoin to that trader
2. Add new buy-sell orders to the order book to maintain liquidity

This process repeats thousands of times, with millions of USD traded every second. The small profit from spreads accumulates into a steady revenue stream.

( Technology Behind

Most modern market makers do not place orders manually. They use:

• Algorithmic trading bots: Automatically adjust orders based on real market conditions
• High-Frequency Trading (HFT): Execute thousands of trades per second
• Deep data analysis: Determine optimal prices based on order book depth and current volatility

These tools allow them to hedge risks, manage asset inventories, and adapt to market changes within milliseconds.

Market Maker vs Market Taker: Two Sides of Trading

Every crypto trade involves two main roles: the market maker and the market taker.

) Market Maker###

• Action: Place limit orders waiting to be filled
• Purpose: Provide liquidity to the market
• Trading fee: Usually receive discounts or even get paid
• Example: Place a buy order for Bitcoin at $100,000 and wait

( Market Taker)

• Action: Execute orders immediately at current prices
• Purpose: Create trades, withdraw liquidity from the market
• Trading fee: Pay higher fees
• Example: Want to buy Bitcoin now, accept the current ask of $100,010

Perfect Balance

• Makers ensure liquidity is always available
• Takers generate demand and help match Maker’s orders
• Result: Stable markets, narrow spreads, smooth trading

Major Players in Market Making (2025)

Wintermute

Leading algorithmic trading firm, Wintermute manages around $237 million across over 300 on-chain assets on 30 different blockchains. Operating on more than 50 crypto exchanges, with a cumulative trading volume close to $6 trillion (as of November 2024).

Advantages: Global reach, advanced algorithmic strategies, high reputation

Disadvantages: Less focus on small tokens, intense competition, may not suit early-stage projects

GSR

With over a decade of experience, GSR offers market making, OTC trading, and derivatives. By February 2025, the firm had invested in over 100 top blockchain projects, operating on 60+ exchanges.

Advantages: Deep liquidity, long-term experience, support for token offerings

Disadvantages: Mainly targets large projects, higher costs for smaller enterprises

( Amber Group

This company manages about $1.5 billion in trading capital for over 2,000 institutional clients, with accumulated trading volume exceeding $1 trillion.

Advantages: AI-based services, strict compliance, strong risk management

Disadvantages: High entry barriers, not suitable for small or emerging projects

) Keyrock

Founded in 2017, Keyrock executes over 550,000 trades daily across 1,300+ markets and 85 exchanges.

Advantages: Advanced algorithmic trading, customizable solutions, data-driven approach

Disadvantages: Limited resources, less well-known than larger firms, high fees for custom services

DWF Labs

Managing a portfolio of over 700 projects, supporting more than 20% of the top 100 CoinMarketCap projects. Operating on 60+ leading global exchanges.

Advantages: Strong market liquidity, competitive OTC solutions, early-stage investments

Disadvantages: Only partners with Tier 1 exchanges, strict evaluation process

Benefits Market Makers Bring to Exchanges

1. Enhanced Liquidity

Market makers continuously place orders, creating significant order book depth. A buy order for 10 BTC no longer causes sharp price movements—there’s enough liquidity to absorb trades without shaking the market.

2. Reduced Volatility

Crypto markets are known for their volatility, but market makers act as stabilizers. They maintain narrow bid-ask spreads, preventing extreme fluctuations, especially in small altcoins.

3. Improved Market Efficiency

With sufficient liquidity, prices are less affected by emergency situations and better reflect true supply and demand. As a result:

• Bid-ask spreads decrease → Lower trading costs
• Orders fill faster → Traders can enter/exit positions without delays

4. Attract Traders & Increase Revenue

High liquidity markets attract both retail and institutional traders. Larger trading volumes mean higher fees. That’s why exchanges often collaborate with market makers to list new tokens—ensuring new assets have liquidity from day one.

Risks Market Makers Face

Market Volatility

Crypto markets can move rapidly beyond control. If Bitcoin drops 5% in minutes, a large position holder market maker could suffer unexpected losses before adjusting orders.

Inventory Risk

To provide liquidity, market makers must hold large amounts of cryptocurrencies. If holdings depreciate, losses can be significant—especially in low-liquidity markets with extreme price swings.

Technology Risks

Reliance on automated systems means:

• Technical errors or cyberattacks can disrupt trading strategies, leading to major losses
• Latency issues may cause orders to execute at undesired prices during rapid volatility

Regulatory Risks

Cryptocurrency regulations vary by country. Some jurisdictions even consider market making as market manipulation. Compliance costs can be high when operating across multiple global markets.

Conclusion

Market Makers are the backbone of the modern crypto trading ecosystem. Without them, markets would descend into chaos—wide spreads, extreme volatility, and difficulty executing large trades.

Market makers not only provide liquidity but also:

• Stabilize prices and narrow spreads
• Support new token listings
• Create a smoother trading experience for all participants

However, they also face significant risks from volatility, technology, and regulation. As the crypto market continues to mature, the role of market makers will become increasingly vital—not only to maintain liquidity but also to build a trustworthy, accessible, and efficient digital asset market.