Market Makers in Crypto: Key Roles and How They Operate

In the digital asset trading ecosystem, market makers play a central role in maintaining liquidity and price stability. Without these mechanisms, traders would have to endure wide bid-ask spreads, continuous price anomalies, and difficulties in executing large-volume trades. This article will analyze in depth the concept of Market Maker, their operational processes, differences from Market Taker, prominent industry players in 2025, along with the benefits and risks they bring to the market.

Basic Concept: What Is a Market Maker?

A (market maker) is a specialized trading participant—including financial institutions, algorithmic trading firms, or experienced individual traders—who operate continuously to provide liquidity by simultaneously placing buy (bid) and sell (ask) orders for specific cryptocurrencies at various price levels.

This two-way action ensures the market remains active, allowing regular traders to complete transactions instantly without waiting for someone else to place a counter order. Without market makers, the cryptocurrency market would become less efficient, leading to wider bid-ask spreads, sharp price swings, and difficulties in executing large-volume trades.

Market makers primarily earn income from the bid-ask spread—the difference between the price they are willing to buy and the price they are willing to sell. Instead of trying to buy low and sell high like typical traders, they profit from hundreds or thousands of small trades each day, with each trade generating incremental gains.

How Market Makers Operate

Basic Process

Market makers perform their activities through a systematic process:

Step 1: Placing Limit Orders
A market maker places a buy order for Bitcoin (BTC) at $100,000 and a sell order at $100,010. This spread $10 creates a profit margin$10 —the bid-ask spread.

Step 2: Executing Trades
When a trader accepts the $100,010 sell price, the market maker sells BTC and immediately places new buy and sell orders into the order book. This spread ###accumulates( over thousands of trades, generating a steady income stream.

Step 3: Managing Positions and Risk Prevention
Market makers not only trade but also manage their inventory by hedging risk across multiple exchanges to minimize the impact of market volatility.

) Supporting Technologies

Most modern market makers utilize algorithmic trading bots that automatically adjust orders based on real-time market conditions. Some companies employ high-frequency trading (HFT), executing thousands of trades per second to quickly adapt to market changes.

These bots analyze order book depth, volatility levels, and order flow to determine optimal bid-ask levels, ensuring they remain competitive in providing liquidity.

Why Are Market Makers Important for the Crypto Market?

The 24/7 nature of cryptocurrency markets differs from traditional stock markets, and market makers are essential in ensuring liquidity is always available regardless of time. This helps prevent extreme price swings caused by low trading volume.

Furthermore, when new tokens are listed, market makers provide initial liquidity—an important factor in attracting traders to newly issued assets. Many projects partner with reputable market-making firms to maintain a healthy trading environment.

By narrowing the gap between buyers and sellers, they help create a more stable and efficient trading environment, making the crypto market more accessible to both individual investors and large institutions.

Market Maker vs Market Taker: The Fundamental Difference

Cryptocurrency trading involves interaction between two main participant groups: market makers (Market Maker) and market takers ###Market Taker###.

Market Maker: Providing Liquidity

Market makers add liquidity to the market by placing limit orders—buy or sell orders at predetermined prices. These orders are not executed immediately but remain in the order book, waiting for matching counterparts.

Example: A market maker places a buy order for Bitcoin at $100,000 and a sell order at $100,010, ensuring that anyone wanting to buy BTC will find a suitable sell order at a reasonable price.

Market Taker: Immediate Trading

Market takers are traders who execute orders instantly at the current market price, accepting available buy or sell prices without waiting for their orders to be matched.

Example: A trader wants to buy BTC immediately at the market price of $100,010, which matches the market maker’s sell order, completing the trade.

Creating an Effective Market Balance

The interaction between these two creates a stable trading environment:

• Market makers ensure buy-sell orders are always available, facilitating smooth transactions
• Market takers generate activity and demand, enabling market makers’ orders to be continuously matched
• This balance reduces slippage, increases order book depth, and maintains minimal trading costs

Leading Market Makers in 2025

Wintermute

Wintermute is a leading algorithmic trading firm specializing in providing liquidity across numerous cryptocurrency exchanges. As of February 2025, Wintermute manages approximately $237 million in over 300 on-chain assets across more than 30 blockchains, reflecting its significant role in the crypto ecosystem.

The company offers crypto market making services to over 50 global exchanges, with a cumulative trading volume nearing $6 trillion as of November 2024.

Advantages: Wide operational scope across CEX and DEX, advanced algorithmic trading strategies, high reputation.

Disadvantages: Intense competition, less focus on small or niche tokens, may not suit early-stage projects.

GSR

GSR is a top liquidity provider with over a decade of experience, specializing in crypto market making, OTC trading, and derivatives trading.

By February 2025, GSR has invested in over 100 companies and protocols, supporting over 20% of the top 100 projects on CoinMarketCap. It operates globally, providing liquidity on more than 60 exchanges.

Advantages: Deep liquidity, long-standing presence, focus on continuous liquidity management.

Disadvantages: Mainly targets large projects and institutional trading, higher costs for small and medium enterprises.

Amber Group

Amber Group manages approximately $1.5 billion in trading capital for over 2,000 institutional clients as of February 2025. Known for advanced trading strategies and strong market presence, with accumulated trading volume exceeding $1 trillion.

Advantages: AI-driven services, strict compliance, comprehensive financial services.

Disadvantages: High entry barriers, broad operational scope, less suitable for small or emerging projects.

Keyrock

Keyrock executes over 550,000 trades daily across more than 1,300 markets and 85 exchanges. Founded in 2017, it provides crypto market making, OTC trading, options, and liquidity pool management.

Advantages: Algorithmic trading, customizable solutions, data-driven approach.

Disadvantages: Limited resources, lesser-known brand, customization costs can be high.

DWF Labs

DWF Labs manages a portfolio of over 700 projects, supporting over 20% of the top 100 projects and more than 35% of the top 1,000 projects on CoinMarketCap. It offers liquidity across more than 60 top exchanges, trading on both spot and derivatives markets.

Advantages: Market liquidity provision, competitive OTC trading solutions, early-stage project investments.

Disadvantages: Only collaborates with Tier 1 projects and exchanges, strict project evaluation processes.

Benefits Market Makers Bring

Increased Liquidity

Market makers continuously place buy and sell orders, ensuring exchanges have sufficient volume and depth. For example, without them, a 10 BTC buy order could cause a sharp price increase; with their participation, enough liquidity exists to execute trades without significant price impact.

Price Stability

Crypto markets are highly volatile, but market makers help stabilize prices by constantly adjusting bid-ask spreads, preventing extreme fluctuations, especially in smaller altcoins.

Improving Market Efficiency

Market makers promote price discovery, helping prices be determined by actual supply and demand rather than speculation:

• Lower bid-ask spreads, reducing trading costs
• Faster order matching speeds

Increasing Volume and Revenue

High-liquidity markets attract more traders, increasing trading volume and exchange fees. Exchanges often partner with market makers to support listing new tokens.

Risks Involved

Market Volatility

Rapid price swings can cause unforeseen losses, especially when holding large positions. If the market moves against them too quickly, market makers may not have time to adjust their orders.

Inventory Risk

Market makers hold large amounts of cryptocurrencies; if prices drop sharply, losses can be significant, particularly in low-liquidity markets.

Technological Risks

Dependence on advanced algorithms and HFT:

• Technical errors or cyberattacks can disrupt trading strategies
• Latency issues may lead to orders being executed at undesired prices

Legal Risks

Cryptocurrency regulations vary across countries; sudden legal changes can impact operations. Some jurisdictions may classify crypto market making services as market manipulation, leading to high compliance costs.

Conclusion

Market makers are an indispensable component of the cryptocurrency trading ecosystem, providing the liquidity and stability necessary for efficient trading experiences. Their continuous presence ensures traders can execute orders swiftly, supporting the sustainable growth of the market.

While playing a vital role, market makers also face risks from price volatility, regulatory changes, and technological challenges. As the crypto trading landscape continues to evolve, their role will become increasingly important in shaping a mature, accessible digital asset market.

It is crucial to recognize both the risks faced by market makers and their essential function in maintaining a balanced, efficient, and healthy crypto market.