Market Maker in Cryptocurrencies: The Invisible Gear that Keeps Markets Running

Liquidity doesn’t come from nowhere. Behind every quick and efficient transaction in the crypto market is a key participant: the market maker. While most traders aim to profit by buying low and selling high, market makers operate under a different logic—they earn from the small difference between buy and sell prices, providing the fuel that keeps the entire ecosystem running.

Without these specialized actors, traders would face challenging scenarios: huge spreads between supply and demand, extreme volatility, and the impossibility of executing large orders without drastic price impacts. Market makers solve this problem by maintaining a constant presence on order books, ensuring there is always a counterparty for those wanting to buy or sell.

Why Are Market Makers So Important?

Cryptocurrency markets operate 24/7—unlike traditional stock markets with fixed hours. This scenario demands liquidity providers to be always available. Market makers fill this gap, ensuring that regardless of the time, traders can execute their trades without delays or unexpected price changes.

Additionally, when new tokens are listed on exchanges, project teams often seek partnerships with experienced market making firms. This collaboration provides crucial initial liquidity, attracting retail and institutional traders to newly launched assets.

Market makers’ contribution goes beyond immediate liquidity. By continuously placing buy and sell orders at multiple price levels, they facilitate price discovery—helping the market reach consensus on the true value of assets through continuous quotations and dynamic adjustments.

How Does a Market Maker Operate?

The mechanics are relatively simple in theory but sophisticated in practice. A market maker places a buy order and a sell order simultaneously. For example, someone offers to buy Bitcoin at $100,000 and sell at $100,010—creating a spread of $10 representing the profit margin.

When a trader accepts the sell price, the market maker sells the asset and replenishes the order book with new buy/sell orders. This cycle repeats thousands of times, and the accumulated spread over these operations forms a steady revenue stream.

The real edge lies in inventory and risk management. Market makers don’t just execute trades—they constantly monitor their positions across multiple exchanges to minimize exposure to price fluctuations. Many use high-frequency trading algorithms (HFT) capable of executing thousands of transactions per second, allowing instant adjustments as market conditions change.

Modern algorithmic bots analyze liquidity depth, volatility, and order flow to determine optimal spreads. This automated process ensures offered prices remain competitive and aligned with current market conditions.

Market Maker vs. Market Taker: Two Sides of the Same Coin

Every successful transaction results from the interaction between two participant types. Market makers add liquidity by placing limit orders waiting for execution. For example, a market maker places buy orders for BTC at $100,000 and sell at $100,010. These orders sit in the book, ready for someone to execute.

Market takers operate oppositely. They execute immediate orders at current market prices. By doing so, they remove liquidity from the market. If someone wants to buy BTC instantly at the current price of $100,010, they fill an existing sell order, completing the trade immediately.

This dynamic creates an essential balance:

• Market makers: ensure buy and sell orders are always available
• Market takers: generate activity and demand, ensuring market makers’ orders are consistently filled
• Result: reduced slippage, greater order book depth, and lower transaction costs for everyone

Leading Market Making Actors in 2025

The crypto market making sector is led by specialized firms combining advanced technology, trading expertise, and substantial capital.

Wintermute

A leader in algorithmic trading, Wintermute stands out for its advanced strategies and significant market presence. As of February 2025, it managed approximately $237 million across more than 300 on-chain assets distributed over 30 different blockchains. It operates on over 50 global exchanges, with a cumulative trading volume of nearly $6 trillion until November 2024.

Strengths: broad coverage across CEXs and DEXs, sophisticated algorithmic technology, solid industry reputation.

Limitations: intense competition from other top-tier firms, less focus on niche tokens, less suitable for very early-stage projects.

GSR

With over a decade in the crypto market, GSR offers services beyond market making—including OTC trading, derivatives, and specialized management. By February 2025, it had invested in over 100 relevant companies and protocols within the Web3 ecosystem, acting as a liquidity provider on 60+ exchanges.

Strengths: proven experience, deep liquidity support across multiple platforms, focus on token launches.

Limitations: primarily geared toward larger projects and institutional traders, customized solutions can be costly.

Amber Group

Managed approximately $1.5 billion in trading capital for over 2,000 institutional clients in February 2025. Its accumulated volume exceeded $1 trillion in the same period, with a strong focus on AI-driven services and regulatory compliance.

Strengths: AI-powered technology, comprehensive financial services, emphasis on risk management.

Limitations: high entry requirements, diversified focus beyond market making, less accessible to emerging projects.

Keyrock

Founded in 2017, this algorithmic trading firm processed over 550,000 trades daily across 1,300 markets and 85 exchanges as of February 2025. Besides market making, it offers OTC trading, options desks, treasury solutions, and liquidity pool management.

Strengths: data-driven optimization, tailored solutions for different regulatory contexts, refined algorithmic trading.

Limitations: smaller scale compared to industry giants, less brand recognition, potential for higher fees on customized services.

DWF Labs

Focused on Web3 investments and market making, managed a portfolio of over 700 projects in February 2025, supporting 20% of the Top 100 and 35% of the Top 1000 projects on CoinMarketCap. Provided liquidity on 60+ major exchanges, operating in spot and derivatives markets.

Strengths: robust market liquidity, competitive OTC solutions, investment in early-stage projects.

Limitations: works exclusively with Tier 1 projects and exchanges, strict project evaluation criteria.

Tangible Benefits for Exchanges

Market makers transform exchanges into viable and attractive trading environments. When an exchange can retain these liquidity providers, the ripple effects benefit the entire platform.

Increased Liquidity and Smooth Execution

Market makers continuously place buy and sell orders, ensuring depth in the order book. This allows large trades to be executed without drastic price swings. Without these providers, a 10 BTC purchase could spike the price significantly. With market makers, sufficient liquidity absorbs this trade without severe impacts.

Price Stability in Volatile Environments

Cryptocurrencies are notoriously volatile, but market makers help contain extreme fluctuations. During dips, they provide buy-side support. During surges, they reduce excessive spikes by maintaining active supply. This stabilizing role is especially crucial in smaller altcoin markets with lower volumes.

Reduced Spreads and Lower Costs

By facilitating price discovery through real supply and demand, market makers significantly reduce bid-ask spreads. This directly benefits traders with lower costs and faster order execution.

Attracting Larger Volumes and Revenue for the Platform

Liquid markets attract retail and institutional traders. More significant trades mean higher fee revenue. Exchanges often partner with market makers to support new token listings, ensuring immediate liquidity for newly launched assets.

Risks Faced by Market Makers

Despite the benefits, market making activities carry considerable risks.

Sudden Volatility

Rapid price swings can cause unexpected losses, especially when positions are large. If the market moves against the market maker too quickly, there may not be enough time to adjust orders, resulting in negative returns.

Inventory Risk

Holding large amounts of cryptocurrencies to ensure liquidity exposes the market maker to losses if the value of these holdings drops dramatically. This risk is amplified in low-liquidity markets where fluctuations are more pronounced.

Technological Challenges

Reliance on advanced algorithms and HFT systems introduces vulnerabilities. Technical failures, system errors, or cyberattacks can disrupt trading strategies. Latency issues may cause orders to be executed at undesirable prices in fast-moving markets.

Regulatory Uncertainty

Regulations vary by country, and sudden legal changes impact market making operations. Some jurisdictions classify these activities as market manipulation. Compliance costs are high for firms operating across multiple global markets.

Conclusion: The Invisible Backbone of Crypto Trading

Market makers are fundamental elements of the cryptocurrency trading ecosystem. They provide the liquidity and stability that enable market efficiency and continuous trading experiences. Their constant presence ensures orders are executed promptly, contributing to the overall health of markets.

While facing market risks, regulatory challenges, and technological hurdles, the role of market makers remains vital. As crypto trading evolves, their importance is likely to grow. Recognizing both their essential contribution and the risks they face is key to understanding a more mature, efficient, and accessible digital asset market.