The role of market makers (crypto market maker) in modern cryptocurrency trading

Market makers are the ones who essentially hold up the entire crypto market. They constantly place buy and sell orders, providing you with the opportunity to open a position at a fair price at the right moment. Without these players, digital asset trading would turn into chaos: prices would jump wildly, spreads would be huge, and large orders would be executed at a loss.

What does a (crypto market maker) do?

Simply put: a market maker is a trader, firm, or institution that continuously places simultaneous buy (bid) and sell (ask) orders for a specific asset. Here’s the essence of their work:

Mechanics:

• Places a buy order for BTC at $88,870
• Simultaneously places a sell order for the same BTC at $88,880
• The difference in $10 — is their profit margin

There can be thousands of orders per day. The margin on each trade is small, but on a large scale, it generates a stable income.

Why do they do this: Market makers create market depth, narrow spreads, and stabilize prices. Thanks to them, the market doesn’t plunge into a abyss during panic and doesn’t skyrocket during rallies. Major financial institutions, hedge funds, and specialized trading firms — Wintermute, GSR, DWF Labs — earn seriously from this.

Market maker vs. market taker: who is who?

It’s important not to confuse these roles — they are opposites:

Market maker (liquidity provider):

• Places limit orders that remain in the order book
• Waits for their order to be filled
• Profits from the spread
• Risks holding positions
• Pays lower (or receives rebates)

Market taker (liquidity consumer):

• Immediately executes existing orders at the current market price
• Doesn’t wait — executes the trade instantly
• Pays a higher fee
• Does not bear long-term position risk

Both are needed for each other. Makers create conditions, takers use them. Together, they create a functioning market.

How does a market maker manage risks and earn?

Work process:

1. Algorithmic pricing — bots constantly analyze volatility, order book depth, market movements, and adjust spreads in real time.

2. Inventory management — holding large volumes of crypto is risky, so makers hedge positions across multiple exchanges simultaneously, minimizing exposure.

3. High-frequency trading (HFT) — some firms execute thousands of trades per second, quickly adapting to micro market changes.

4. Dynamic spread management — during calm markets, spreads are narrow; during volatility, they widen automatically.

Why are market makers critical to the crypto market?

Crypto trades 24/7 — unlike stock markets with fixed hours. Market makers provide liquidity around the clock, preventing price swings due to low volumes during nighttime.

Additionally, they support listings of new tokens, providing initial liquidity. Many projects pay market makers to maintain a healthy trading environment for their asset during the first weeks after listing.

Result: markets become more stable, accessible to retail and institutional traders.

Leading crypto market makers in 2025

Wintermute

The trading volume they handle per month is about $6 trillions (as of November 2024). As of February 2025, they managed approximately $237 million across 300+ on-chain assets.

Strengths:

• Presence on 50+ exchanges worldwide
• Advanced algorithms
• Strong reputation in the industry

Weaknesses:

• Competition from other major players
• Less focus on small and niche tokens

GSR

A company with over 10 years of experience in the crypto market. As of February 2025, they have invested in more than 100 projects and protocols.

Specialty: Besides market making, they engage in OTC trading, derivatives trading, servicing issuers, investors, and miners.

Servicing: 60+ crypto exchanges

Amber Group

Manages trading capital of about $1.5 billion for 2000+ institutional clients. Total trading volume exceeds $1 trillion (as of February 2025).

Key focus: AI solutions, compliance, risk management.

Minus: High entry requirements, not suitable for small projects.

Keyrock

Founded in 2017, manages 550,000 daily trades across 1,300+ markets through 85 exchanges. Offers not only market making but also OTC, options desks, treasury solutions.

Advantage: Data-driven approach, tailored solutions for different regulatory environments.

DWF Labs

Manage a portfolio of 700+ projects, support over 20% of the Top-100 CoinMarketCap and 35% of the Top-1000.

Difference: Also invest in early-stage projects, trade both spot and derivatives markets.

How do market makers help exchanges?

Expanded liquidity

Market makers continuously place orders, creating depth in the order book. This allows for large volume trades to be executed smoothly without sharp price movements.

Example: Without market makers, trying to buy 10 BTC could push the price up by 5-10%. With market makers, the trade occurs almost at the current price.

Reduced volatility

Market makers constantly adjust spreads, preventing wild fluctuations. During panics, they support buying; during rallies, they slightly reduce the pace of excessive jumps.

Increased efficiency

Narrow spreads, fast execution, fair pricing — all thanks to the presence of market makers. Traders pay lower fees and slippage.

Attracting traders and revenue

Liquid markets attract thousands of new traders, which means more volume and higher fees for exchanges.

What risks do market makers face?

Market volatility risk

The crypto market can swing 10-20% within an hour. If a market maker holds a large position, they may not have time to adjust orders and could incur losses.

Inventory risk

Market makers hold large crypto volumes to ensure liquidity. If asset prices fall, they can lose significantly.

Technological risks

Dependence on algorithms and HFT systems means any bug, cyberattack, or delay can lead to financial losses. Latency issues may cause orders to be executed at undesirable prices on fast-moving markets.

Regulatory risks

Regulations vary across countries. Sudden legal changes, classifying market making as market manipulation — all can disrupt the business. Compliance costs can be high when operating across multiple global markets.

Summary

Market makers are the blood of the crypto market. Without them, trading would be inefficient, volatile, and inaccessible to most. Their constant presence ensures you can always execute an order at a fair price.

However, they face serious challenges: market volatility, technological failures, regulatory changes. Despite this, the role of market makers only grows as the crypto market matures and institutional investors enter.

Recognizing the risks they take and the critical role they play helps understand why a healthy crypto market simply cannot exist without effective market makers.