Crypto market makers: how do they shape liquidity in the market?

The cryptocurrency market operates 24/7, and behind its seamless operation are people many traders don’t even notice — market makers. They constantly place buy and sell orders, literally feeding the market with liquidity. Without their presence, trading would be hell: huge spreads, impossible to quickly enter or exit a position, prices would jump wildly. These guys profit from the difference between buy and sell prices, but at the same time they ensure the health of the entire ecosystem.

Who creates liquidity on crypto exchanges?

Essentially, a market maker is a specialized firm or trader that constantly posts two-sided orders (and buy and sell) on assets. This is not just a retail trader waiting for the price to hit a certain point. Market makers operate based on algorithms, analyze volatility, and automatically adjust their quotes depending on market conditions.

On centralized exchanges and decentralized platforms, their role is critical. When you want to sell 5 BTC, there is already a buy order ready. When you need to quickly enter a position — the spread is narrow, execution is fast. This is not by chance; it’s the work of market makers.

Most large market makers are financial institutions, hedge funds, and specialized trading firms. But experienced retail traders sometimes place limit orders and effectively become micro-market makers.

How does the market creation process actually work?

Let’s take Bitcoin. Imagine a market maker who has placed a buy order for BTC at $86,860 and a sell order at $86,870. A $10 spread is their potential margin.

When a trader buys BTC at $86,870, the market maker profits from this trade. Then they immediately place new orders. Trade after trade, spread after spread — a steady income accumulates.

But this only works thanks to automation. Modern market makers use high-frequency algorithms that execute thousands of trades per second. They instantly respond to changes in order book depth, volatility levels, and information flow. Each algorithm constantly solves one task: where to place the next order to earn profit and avoid significant losses if the price moves against their position.

Risk management is key here. Market makers hedge their positions across different exchanges to minimize the impact of price fluctuations. If they hold large amounts of crypto, they don’t just hold it — they actively trade it, balancing their portfolio.

Market makers vs. market takers: two poles of the market

A market taker is a classic trader who wants to enter or exit a position immediately. They take the available price and close the deal instantly. Takers remove liquidity from the market.

In contrast, a market maker creates liquidity. They are not in a rush, they place an order and wait. It’s even better for them when a trader comes and agrees to their price.

It’s a symbiosis. Makers provide a continuous flow of orders, enabling takers to execute their trades quickly. Takers, in turn, generate demand and activity, giving makers the opportunity to earn.

The result: narrow spreads, deep order books, fast execution, low fees. The entire market becomes more efficient.

Who dominates market making in 2025?

Wintermute

Wintermute is one of the giants of this market. As of February 2025, the company manages approximately $237 millions across more than 300 assets on 30+ blockchains. Their total trading volume reaches nearly $6 trillions.

Wintermute provides liquidity on 50+ crypto exchanges and is known for its advanced algorithmic strategies. They work with both large platforms and niche exchanges, although their main focus remains on well-established projects.

GSR

GSR is a veteran of the crypto market with over 10 years of experience. They not only engage in market making but also provide OTC trading, derivatives trading, and investment services.

As of February 2025, GSR has invested in 100+ major companies and protocols in Web3. They operate on 60+ exchanges globally, and their services are mainly targeted at large projects and institutional clients. Startups and small projects may find their services expensive.

Amber Group

Amber Group manages trading capital of $1.5 billion for 2000+ institutional clients. Their total trading volume exceeds $1 trillion (as of February 2025).

The company is known for its AI-oriented approach and strong risk management. But entry requirements are high, and small projects have no place here.

Keyrock

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

Keyrock is known for algorithmic liquidity optimization and a personalized approach. However, they have fewer resources than giants and are less well-known in broad circles.

DWF Labs

DWF Labs manages a portfolio of 700+ projects, supporting over 20% of the top-100 and 35% of the top-1000 projects according to CoinMarketCap. They provide liquidity on 60+ leading exchanges, working with both spot and derivatives.

Minus: they only work with Tier 1 projects and exchanges, and their evaluation procedures are very strict.

Why are market makers so important for exchanges?

Imagine an exchange without liquidity — it’s like a store where nothing is ever sold. Market makers solve this problem.

More trading volume. When an exchange has a deep order book and narrow spreads, traders trade more actively. More trades = more commissions for the exchange.

Price stability. Market makers place buy orders during dips and increase supply during rises. This smooths out fluctuations and prevents panic sells due to lack of liquidity.

Attracting new tokens. When a new token is listed on an exchange, market makers provide initial liquidity. Without them, a new asset would be untradeable.

Competitive advantage. Exchanges with better liquidity win over competitors. Traders choose places where they can quickly enter and exit.

What risks do market makers carry?

It sounds profitable, but it’s a job with risks.

Crypto market volatility. When the price drops 20% in an hour, a market maker with a large position can suffer serious losses. If the market moves faster than algorithms can react, losses accumulate.

Inventory risk. Market makers hold huge volumes of crypto. If the value of the assets they hold suddenly falls, they can lose millions. This is especially dangerous in low-liquidity markets where price movements are sharper.

Technological failures. High-frequency algorithms are complex systems. Lags, bugs, cyberattacks, or system errors can disrupt trading and lead to financial losses. Even a millisecond delay can be critical.

Regulatory uncertainty. Legislation around crypto varies. In some countries, market making could be classified as market manipulation. Compliance costs in different jurisdictions can be enormous.

Summary

Market makers are the backbone of the crypto market. Without them, trading would be inefficient, expensive, and slow. They provide liquidity, stabilize prices, and make the market accessible to all participants — from retail traders to institutional investors.

But it’s not charity. They earn from spreads, hedge risks, and constantly adapt strategies. Although their work is invisible, their influence on the market is huge. As the crypto industry develops, the role of market makers will only grow, shaping a more mature and accessible digital asset market.