Have you ever wondered what exactly top crypto market makers do and how they do it? After all, keeping the cryptocurrency market accessible and liquid for traders, investors, and other stakeholders globally can’t be an easy job!
And if you’ve been following the crypto market this year, you’ll know that the stakes are higher than ever before (especially with Bitcoin on the verge of a potential breakout). And top crypto market makers are at the center of all the action.
In this blog, we’ll take a closer look at what market makers are, what the benefits of market making are, and who the top players in the industry will be in 2024. Read on!
What are market makers?
Market makers are individuals or firms that act as middlemen simultaneously for both buyers and sellers. They buy crypto from people looking to sell and sell them to buyers looking to buy, thereby ensuring that there is always someone on the other side of a trade.
The actions of market makers provide liquidity – the degree to which an asset can easily be bought or sold without significantly affecting its price stability – even in a fast-moving market. And in this way, they keep the market stable, reduce the volatility of prices, and keep prices fair. They also reduce the risk of price manipulation by market actors, especially since cryptocurrency markets are largely unregulated.
Market makers have deep knowledge of order books, potential investments, trade tools, risk management, and market-making strategies and that helps them make trades efficiently and seamlessly.
Many cryptocurrency projects partner with market makers to benefit from their expertise and knowledge and to help their tokens gain credibility, price stability, and trading volume.
How does market-making work in crypto?
Market makers actively and continuously quote bid prices (the price they’re willing to buy an asset for) and ask prices (the price they’re willing to sell an asset for). The difference in these two prices creates a bid-ask spread, which determines the profit that market makers collect.
Market-making helps create tighter bid-ask spreads for assets, which means that the differences between buying and selling prices for cryptocurrencies remain low. This facilitates the availability, liquidity, and stability of prices across exchanges such as Huobi, Binance, KuCoin, MEXC, eToro, ByBit, and BingX.
This is especially important in the volatile world of cryptocurrencies. And since cryptocurrencies are the only markets that operate 24/7, having consistent liquidity is crucial for smooth trading experiences. Markets that don’t have narrow bid-ask spreads have lower liquidity, higher volatility, and more difficulty for traders in getting good prices.
What are the benefits of crypto market-making?
Now that you understand some key concepts and functionalities of market-making, let’s take a deeper look at why market makers are important and what benefits they bring to the crypto space.
When cryptocurrency projects partner with reputable market makers for their tokens, they receive the following benefits:
More Liquidity
As mentioned above, one of the key benefits of market-making is that it allows traders to buy and sell cryptocurrencies instantly. This is because market makers ensure that there are always trade orders available, making the entire trading experience smooth, timely, and hassle-free for traders.
Having liquidity in a market safeguards against dramatic price swings and volatility.
Greater Price Stability
Price stability is a concept closely related to liquidity. By placing continuous buy and sell orders, market makers help reduce the volatility that is associated with fast-moving markets like cryptocurrencies. To create a more stable trading environment for a crypto project, market makers place strategic buy and sell orders to help cushion sudden price swings caused by large trading volumes or low liquidity.
Efficient Price Discovery
Top crypto market makers constantly analyze market trends and update their orders accordingly. By keeping a close eye on the market’s supply and demand dynamics, market makers help discover a fair market price for cryptocurrencies.
Reduced Bid-Ask Spread
Market makers continuously quote buy and sell prices, competing with other market makers and traders to create a more efficient market for cryptocurrencies. The presence of competitive prices and a narrow bid-ask spread means that not only is the market more liquid, but trading is also more attractive for market players because the difference in the buying and selling prices is smaller.
Easier Entry and Exit
Since market prices are fair and competitive, and buy and sell orders are readily available, traders can enter and exit trade positions more easily. This means more trading activity in the market.
Higher Trading Volume
With narrower spreads and higher liquidity, traders can participate more actively and in greater numbers. This increases the trading volume in the market which benefits both traders and exchanges.
Less Slippage
Slippage is the difference between the expected price of a trade and the price at which the order is fulfilled. When there is price stability, there tends to be less slippage since orders are fulfilled at the expected price. This is especially important for big orders where even a slight slippage could dramatically impact the bottom line.
Greater Credibility
When a cryptocurrency project has a history of active trading and price stability, it adds to its credibility and is a signal of confidence to investors. It indicates that this project is dedicated to ensuring a healthy and stable market for its token, making the project more attractive to investors and boosting its reputation.
Easier Launch for New Tokens
Partnering with a market maker is crucial for successfully launching a new token. With the help of market makers, new tokens can start strong with a huge number of buyers and sellers from Day 1. This builds trust and visibility, getting investors interested and actively involved in its trading.
Better Order Book Depth
Market makers place orders for tokens at different price points, creating a greater order book depth. This depth creates greater credibility as it signals to traders that there are interested parties on both sides willing to buy and sell at different price points.
Top Crypto Market Makers of 2024
Crypto Market Makers 2024
Why did the crypto trader bring a ladder to the exchange? Because they heard the prices were about to skyrocket!
But that won’t happen when there are market makers actively participating in crypto trading.
Here are the top crypto market makers you need to watch out for in 2024!
Cumberland (DRW)
Cumberland was founded in 2014 and is a subsidiary of trading powerhouse, DRW. This market maker claims to provide ‘deep, dependable liquidity in cryptoassets’ and provides unparalelled market insights for institutional investors who are looking to safely capitalize on opportunities in the crypto space. The company understands the needs of sophisticated market participants and is able to provide tailored solutions to facilitate them.
Cumberland has a track record of handling massive trading volume with a high focus on security and offers support for various tokens, deep liquidity pools, 24/7 access to relationship managers, risk management, and technical analysis. It also uses algorithmic trading and price improvement tech to help find optimal prices for tokens.
GSR
GSR was founded in 2018, and specializes in algorithmic trading and liquidity solutions for digital assets. It also offers OTC (Over-the-Counter) trading services for large cryptocurrency transactions and derivatives market-making.
GSR is also an active participant and investor in the Web 3.0 and blockchain space and works with multiple market participants across regions. As a crypto-native firm, GSR has a deep understanding of the cryptocurrency market and offers sophisticated and tailored solutions and strategies to help clients adjust to evolving market conditions.
With 60+ exchange integrations, GSR is a huge player in ensuring market liquidity. It offers daily market reports and performance tracking to give clients complete transparency. This firm is highly suited for clients with complex needs and uses an in-house trading software to distinguish itself from other market players.
Kairon Labs
Kairon Labs is a trusted crypto market maker since 2019. It uses cutting-edge AI technology to provide automated liquidity, and its intelligent platform uses analytics and machine learning to optimize prices, manage risk, and execute market-making seamlessly.
Kairon Labs has collaborated with more than 500+ clients across multiple exchanges and its market-making strategy focuses on decentralized exchanges. The company uses its in-house propriety software and vast network of investors and 100+ exchanges to provide world-class services to clients 24/7.
Wintermute
Wintermute was founded in 2017 and is yet another prominent market maker in the global crypto space. Wintermute is an algorithmic trading firm that uses AI algorithms to identify market opportunities and develop liquidity solutions. It serves institutional clients with OTC trading for large crypto transactions, offers structured investment vehicles, integrates DeFi strategies into its offerings, and supports crypto project incubations.
Acheron Trading
Acheron Trading was founded in 2018 and has an active presence across 75+ centralized exchanges, 20+ decentralized exchanges, and 15+ blockchains. It specializes in offering ‘technology-focused solutions’ to emerging cryptocurrencies for greater liquidity, visibility, and transparency. This includes market research, consultation, and client education.
Learn more about crypto markets at CryptoPie!
FAQs
Who are the biggest crypto market makers?
The biggest crypto market makers in 2024 are names like GSR, Wintermute, Acheron Trading, and Cumberland. What makes the top market makers stand out from others is their insight into the market, the use of AI algorithms to identify trading opportunities, tailored solutions, and years of experience.
Who are the top crypto analysts?
Anthony Pompliano is one of the top and most iconic crypto analysts in the world today. He hosts a podcast called The Pomp Podcast and is also a partner at Morgan Creek Digital, one of the best blockchain and digital assets investment firms. He often shares his insights with his 550,000 followers on Instagram, X, and YouTube.
