What is a crypto market maker? In short, a market maker provides liquidity to the cryptocurrency market. By filling the gap between buyers and sellers, they improve trading execution and make the platform more appealing to users. Market makers take a short-term risk in exchange for making scores of trades in both directions. They are naturally present in products with high volumes, but if a token is not as liquid, it will need to hire a market maker.
While this approach is very effective, it is often not appropriate for every situation. While most market makers manually place orders into order books, there are instances where a crypto “market maker” uses ramping to influence prices. If an unsuspecting trader tries to front-run a market maker, they’ll probably incur a loss. Similarly, a crypto “market maker” may use ramping to raise a token’s price before it hits its target, but then disappears when the market maker ceases to trade. In such cases, the token’s price is likely to fall.
One of the oldest and largest crypto market maker, GSR is deeply embedded in the ecosystem. The company’s co-founder discusses how the implosion of terra will affect his or her strategy and how it could create demand for new blockchains. He explains why it is essential to understand the intricacies of this industry. And while the company is a global player, it does not yet have an office in the US.
Other crypto market makers include Wintermute Trading, Alameda Research, Jump Trading, and GSR. Some of the most established crypto market makers have raised seed rounds. Others are growing fast, such as Byte Trading, which is based in London and has been profitable since early last year. It has seven employees and plans to hire several more in engineering, marketing, and sales. So, if you’re interested in entering this new industry, it’s a great time to get involved.
A crypto market maker needs the best technology and infrastructure to operate smoothly. A low-latency trading environment is essential for cryptocurrency liquidity. In addition, a crypto market maker must have the best in class tools for data capture, visibility, and troubleshooting. Traditional liquidity providers built sophisticated market making bots in-house, but these systems have limited technical limits. They’re better off hiring a third-party market maker to increase liquidity.
If you’re a well-intended ICO, you should partner with a crypto market maker. A good market maker will help you create a liquid market for your token, attract sophisticated investors, and ultimately get listed on a higher-tier exchange. Do your due diligence and research your potential market maker. Ask them about their strategy and don’t be misled by promises about trading volume. You want to make sure you’re making the right decision.
A crypto market maker is a broker or an intermediary individual that helps buyers and sellers trade in cryptocurrencies. Market makers are typically large institutions, such as Goldman Sachs or Deutsche Bank Securities Inc. on the NYSE. However, this role is not limited to institutional investors. In fact, individual traders can use crypto market makers, too. In fact, the role of market makers is as important in traditional finance as it is in the crypto world.