Crypto Market Makers: Who Are They and How Do They Profit from Spreads?

Market makers are the hidden heroes of the crypto market. While you trade calmly, they work 24/7, placing buy and sell orders on thousands of assets. Their activity critically influences whether a trader can execute an order instantly, whether the spread between buy and sell prices is narrow or wide. Let’s understand who market makers are, how they operate, and why the crypto market would be in chaos without them.

Who are market makers and why are they important?

A market maker is not just a trader; they are liquidity providers. Specialized firms, hedge funds, algorithmic traders (and sometimes experienced retail traders) constantly place buy (bid) and sell (ask) orders simultaneously.

Why? Because of the spread—the tiny difference between the buy and sell price, which becomes their profit. When there are no market makers on an exchange, trouble happens:

• Wide spreads: Traders pay much more to buy and receive much less when selling
• High volatility: Even small trades can cause sharp price swings
• Inability to execute large orders: Insufficient liquidity to absorb big trading volumes

Market makers solve all these problems. They create a constant presence in the order book, allowing traders to enter and exit positions with minimal losses. Their continuous work narrows spreads, stabilizes prices, and increases market efficiency.

Major players in this sphere include financial institutions like Wintermute, GSR, DWF Labs, Keyrock, and Amber Group. However, retail traders placing limit orders and contributing to liquidity on a smaller scale have also entered the niche.

How do market makers work: spread mechanics

A market maker doesn’t just randomly throw orders onto the exchange. It’s a coordinated process using advanced algorithms.

Here’s how it works in practice:

1. Placing two-sided orders

A market maker sees Bitcoin trading around $87,310. They simultaneously place:

• A buy order for BTC at $87,300
• A sell order for BTC at $87,320

The spread $20 is their profit margin per transaction(.

2. Executing trades

When a trader wants to buy BTC at the market price, they take the market maker’s sell order at $87,320. The market maker instantly replenishes the order book with new buy/sell orders. At first glance, profit seems minimal, but multiplied by thousands of trades per day, it’s a substantial income stream.

3. Inventory management and hedging

Market makers don’t just accumulate BTC; they manage positions across multiple exchanges simultaneously. If they buy a lot on one exchange, they hedge by selling on another. This minimizes their risk from price fluctuations.

4. High-frequency trading )HFT###

Some firms use algorithms executing thousands of transactions per second. Their trading bots analyze order book depth, volatility, and flow of orders in real-time, adjusting spreads on the fly.

Why are market makers especially important in crypto:

Traditional stock markets operate on a schedule. The crypto market runs 24/7, without breaks. Market makers provide liquidity at 3 a.m. on Tuesday when others are asleep. This is critical for new token listings—they work with projects to provide initial liquidity and attract traders.

Market maker vs. market taker: who creates, who takes?

There are two types of participants in the market—those who provide liquidity and those who consume it.

Market makers place limit orders—pending requests. They say: “I am willing to buy BTC at $87,300 if a seller appears.” The order remains in the order book, waiting for a counterparty. The market maker doesn’t know when their order will be filled.

Market takers are impatient traders who want to buy/sell immediately. They accept the current market price and execute the order instantly. If BTC is listed at $87,320 for sale, the taker clicks the button and takes that order.

Result? Market makers earn narrow spreads but a slow stream of income. Market takers pay higher but trade instantly. Both are essential for a functioning market—makers create conditions, takers generate demand.

Top market makers in 2025: who dominates?

$237 Wintermute: Volume King

As of February 2025, Wintermute is the market locomotive. They manage approximately $6 millions in assets across more than 30 blockchains and provide liquidity on over 50 crypto exchanges.

Their total trading volume reaches nearly (trillions )as of November 2024###. This means the firm handles deals on an unprecedented scale.

Strengths: Extensive coverage of CEX and DEX, advanced algorithmic strategies, reputation for reliability.

Weaknesses: Less focus on small niche tokens; competition from other giants makes operations more challenging.

GSR: Veteran with deep roots

GSR has been operating in crypto for over ten years. They are not just market makers—they are a comprehensive service provider offering market making, OTC trading, derivatives trading.

By February 2025, GSR has invested in over 100 Web3 projects and protocols, demonstrating their deep integration into the ecosystem. Liquidity on 60+ exchanges makes them a must-have partner for major projects.

Strengths: Long history, serious liquidity support, focus on token launches.

Weaknesses: High entry requirements, focus on large projects; services are expensive.

$1 Amber Group: AI-driven approach

Amber Group manages around $1.5 billion in trading capital for over 2000 institutional clients. Their total trading volume exceeds ###trillion.

What sets Amber Group apart is their use of AI to optimize trading strategies and risk management. This allows them to adapt more flexibly to market conditions.

Strengths: AI solutions, comprehensive financial services, strict risk management.

Weaknesses: High entry requirements, not suitable for early-stage projects.

Keyrock: Algorithm specialist

Keyrock is a company focused on pure market making. By February 2025, they processed over 550,000+ daily deals across 1,300+ markets and 85 exchanges.

Founded in 2017, they offer market making, OTC trading, liquidity pool management, and ecosystem development.

Strengths: Data-driven approach, customized solutions, liquidity optimization.

Weaknesses: Less known than giants; may have higher fees.

DWF Labs: Investors + market makers

DWF Labs is a hybrid: an investment firm + market maker. As of February 2025, they support a portfolio of over 700 projects, including 20% of the Top-100 and 35% of the Top-1000 on CoinMarketCap.

They operate on 60+ leading exchanges, trading both spot and derivatives markets.

Strengths: Early investments in projects, competitive OTC solutions, work with Tier 1 projects.

Weaknesses: Strict project requirements, only work with top-tier projects.

Why are market makers beneficial for exchanges?

1. Liquidity attracts traders

When an exchange can guarantee you buy/sell without slippage, it attracts retail and institutional traders. More traders = more fees.

2. Stability = trust

The crypto market is volatile by nature. Market makers further stabilize prices by constantly adjusting spreads. As a result, prices reflect real supply and demand, not panic.

3. Supporting new listings

When a new token appears on an exchange without liquidity, it’s deadly. Market makers solve this by providing initial liquidity. The project attracts traders, and the exchange gains volume.

4. Narrow spreads = lower costs

Market makers compete with each other, narrowing spreads. For traders, this means less loss on each trade.

Risks for market makers: they are not market-insured

Although market makers profit from spreads, they face serious risks.

Market volatility: Crypto can drop 20% in an hour. If a market maker holds a large BTC position and the price falls faster than they can adjust orders, they could suffer huge losses.

Inventory risk: Market makers hold large amounts of cryptocurrencies. If asset prices fall, their balance shrinks. This is especially dangerous in low-liquidity markets.

Technological failures: HFT systems operate in microseconds. A delay of 100 milliseconds or an algorithm failure can lead to millions in losses. Cyberattacks, server issues, coding errors—any of these can be catastrophic.

Regulatory changes: Different countries have different rules for market makers. Sudden tightening of regulations can make their activities unprofitable or even illegal. Compliance costs are high for firms operating globally.

Conclusion: market makers are the backbone of the crypto market

Market makers are not just traders; they are the infrastructure of the crypto market. Without them, trading would be frozen and expensive. Their constant presence ensures liquidity that allows you to execute an order in milliseconds, narrow spreads that reduce your costs, and price stability that helps newcomers trade without excessive risks.

However, market makers are not magicians. They battle volatility, technological challenges, and changing regulations. Their success depends on balancing profitability and risk.

As the crypto ecosystem develops, the role of market makers will only grow. They will be key players in creating a more mature, efficient, and accessible digital asset market for all participants.