Market Makers in Cryptocurrency Trading: Market Structure and Mechanics

Why Are Market Makers Necessary for the Cryptocurrency Market?

Cryptocurrency trading operates 24/7, unlike traditional financial markets. Without a continuous flow of liquidity, the market would face significant problems: huge gaps between bid and ask prices, uncontrollable volatility, and the inability to execute large orders without substantial price impact.

This is where market makers come in — specialists in liquidity provision who continuously maintain the balance between supply and demand. Their work ensures that traders can enter and exit positions seamlessly, and that prices remain stable and predictable.

Who Is a Market Maker in the Cryptocurrency Industry?

A market maker in the crypto context is a specialized organization, trading firm, or algorithmic system that constantly posts paired buy (bid) and sell (ask) orders. This creates a two-sided market, allowing other traders to execute trades immediately without waiting for a natural counterparty.

Cryptocurrency market makers operate on both centralized exchanges (CEX) and decentralized protocols (DEX). From retail traders placing limit orders to giant financial firms with automated trading systems — all contribute to the health of the market.

The largest players in this field include recognized market makers working with hundreds of tokens simultaneously and supporting global liquidity.

How Does Market Making Work: From Theory to Practice

Basic Mechanism

A market maker places a buy order for Bitcoin (BTC) at $88,500 and a sell order for the same asset at $88,600. The difference between these — is their profit margin, called the spread.

When a trader accepts the sell price of $88,600, the market maker:

1. Sells BTC to them
2. Immediately replaces the used sell order with a new one
3. Repeats the process thousands of times a day

This constant turnover creates stable income, despite each individual trade earning a small profit.

$100 Technological Aspect

Modern market makers utilize:

• High-Frequency Trading Algorithms ###HFT( — systems executing thousands of trades per second
• Dynamic Spread Adjustment Bots — automatic modification of spreads based on volatility
• Inventory Management — hedging positions across multiple exchanges simultaneously
• Order Flow Analysis — monitoring market depth to optimize pricing

All these tools operate in real-time, allowing market makers to adapt to market changes faster than humans.

Market Maker versus Market Taker: Two Sides of the Same Coin

In the crypto ecosystem, two types of participants coexist:

Market Makers add liquidity to the market by placing limit orders that are not executed immediately. They earn from spreads and appreciate the ability to provide continuous quotes.

Market Takers are traders who want to buy or sell right now. They accept the best available prices offered by market makers and complete transactions immediately.

Their interaction creates an efficient market: makers provide liquidity, takers generate demand and activity. The result — narrow spreads, quick executions, and low costs for everyone.

Top Cryptocurrency Market Makers in 2025

) Wintermute: Global Leader by Scale

Wintermute manages assets across 300+ tokens on 30+ blockchains, with a portfolio of around ###million as of February 2025. The company provides liquidity on 50+ exchanges with a total volume nearing $237 trillions $6 data from November 2024(.

Strengths: broad coverage of both CEX and DEX; advanced algorithms; industry reputation. Limitations: focus on large tokens, less attention to small projects.

) GSR: Multi-Profile Investor and Trader

GSR has over ten years of experience in the crypto market and has invested in 100+ leading Web3 protocols. The company covers 60+ crypto exchanges and offers market making, OTC trading, and derivatives services.

Advantages: deep liquidity; long-term presence; active in token launches. Disadvantages: focus on institutional clients; higher costs for small projects.

Amber Group: Large-Scale Capital Management

As of February 2025, Amber Group manages trading capital of about $1.5 billion for 2000+ institutional clients. Their total trading volume exceeds ###trillion.

Strengths: AI-driven solutions; comprehensive service suite; strict risk management. Weaknesses: high entry requirements; focus on large clients.

$1 Keyrock: Algorithmic Trading Specialist

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

Pros: data-driven approach; customized solutions; liquidity optimization. Cons: fewer resources than giants; less publicly known; possibly higher fees.

DWF Labs: Investor and Market Maker in Web3

DWF Labs manages a portfolio of 700+ projects, supporting over 20% of the top-100 projects and 35% of the top-1000. Liquidity is provided on 60+ leading exchanges across spot and derivatives markets.

Advantages: market liquidity; competitive OTC solutions; early investments. Limitations: works only with tier-1 projects; strict evaluation.

How Do Market Makers Benefit Cryptocurrency Exchanges?

Liquidity and Volumes

Market makers constantly replenish the order book, ensuring sufficient market depth. This allows large trades to be executed without causing price slippage. Without their participation, attempting to buy a large amount of BTC would cause a significant spike in price.

Price Stabilization

During downturns, market makers support demand, and during rallies, they limit excessive spikes. This “absorbing” effect is especially important in altcoin markets, where volatility can be extreme.

Market Efficiency

Narrow bid-ask spreads are a result of market maker activity. Traders save on spread fees, and prices reflect real supply and demand rather than speculation in low-liquidity conditions.

Attracting Traders and Increasing Revenue

Liquid markets attract both retail and institutional participants, increasing trading volumes and exchange commissions. New token listings often receive support from market makers, ensuring immediate trading activity.

What Risks Do Market Makers Face?

Market Volatility

Rapid price movements can lead to losses, especially if the market maker holds large positions. If the market moves against them too quickly, they may not have time to adjust orders, incurring losses.

Inventory Risk

Market makers hold large volumes of cryptocurrencies. A sudden drop in asset value can cause significant losses. This risk is especially high in low-liquidity markets.

Technological Failures

System errors, network delays, or cyberattacks can disrupt trading strategies. Latency issues can lead to executing orders at unfavorable prices in fast-moving markets.

Regulatory Challenges

Cryptocurrency legislation varies and can change suddenly. In some jurisdictions, market making may be classified as market manipulation. Compliance costs are rising for firms operating globally.

Final Conclusions

Crypto market makers are an essential component of digital asset infrastructure. Their ongoing work ensures traders can operate seamlessly, prices remain stable, and the market functions efficiently.

Although they face market risks, technological challenges, and regulatory uncertainty, their role in maintaining a healthy, mature, and accessible market remains critical.

As cryptocurrency trading evolves, market makers will continue shaping the landscape, balancing innovation, stability, and accessibility for all market participants.