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Market makers provide an unseen lifeline for crypto traders, ensuring that digital asset markets operate smoothly even during the most volatile conditions.
Their job is to make sure crypto trading markets function as they should, and they do this by providing liquidity to spot trading exchanges and derivative markets like perpetual futures and options. They enter a constant stream of buy and sell orders to pump this liquidity into crypto markets, ensuring there is sufficient trading volume for each asset pair.
This liquidity is what enables crypto traders to complete their trades without experiencing high slippage. Market makers are especially useful for decentralized exchanges, which rely on automated market maker algorithms and liquidity pools to function as they should.
In addition to serving exchanges, market makers also cater to new crypto startups, helping them with the initial listing process and ensuring there is sufficient liquidity available when they first launch their tokens. They can also help new projects to reach the minimum volume targets they need, providing them with credibility while minimizing volatility.
Market makers are the unsung heroes of the crypto trading world, so let’s take a closer look at some of these valiant organizations, which help to make profitable trading a reality for retail and institutional investors alike.
A primary heavy hitter in the world of market makers, Wintermute is reputed to be one of the leading liquidity providers for “over-the-counter” brokerage deals, supporting more than 200 crypto spot market trading pairs.
Wintermute’s major promise to clients is tight spreads without additional fees, which makes it an interesting option for larger-scale investors. Its OTC division is available around the clock, and it offers two kinds of algorithmic trading methods to support the diverse needs of different clients. These include TWAP and volume-weighted average price, known as VWAP. By offering two methods, it can ensure high-volume OTC traders are executed as swiftly as possible, without any major price impact.
Other features offered by Wintermute include API integration to support user-friendly order execution and a real-time chat system to help facilitate large trades with institutional clients.
Wintermute notably extends its OTC services to crypto derivative markets, covering everything from basic options to contracts-for-differences and non-deliverable futures. These offerings span numerous digital assets, including Bitcoin and hundreds of altcoins.
Wintermute claims to partner with more than 50 CEXs and DEXs and covers over 200 crypto assets. Other services include providing risk management strategies, such as hedging and treasury diversification. On the downside, Wintermute doesn’t publish OTC minimums on its website, and requires clients to make initial contact via email.
Founded in 2017 by a team of crypto-native traders who noticed the disparity in asset prices across global exchanges, Gravity Team is a firm believer in the future of decentralized digital assets, hence its mission to bring stability and liquidity to markets.
Its fully automated proprietary quantitative trading software offers 24/7 liquidity to more than 30 leading centralized crypto exchanges and derivative trading platforms, covering more than 170 cryptocurrency assets. Its goal is to improve price discovery and ensure sufficient liquidity for its clients so they can minimize slippage and transaction costs to create a healthy ecosystem for traders.
What sets Gravity Team apart is its leadership in emerging markets. It specializes in providing projects with the liquidity they need to penetrate new markets, increasing their exposure. In addition, it’s able to bring unprecedented fiat liquidity to exotic markets, and can also offer bespoke agreements to clients, acting as a “boutique market maker” to help projects with niche liquidity requirements.
Gravity’s other main strength is its close-knit relationship with regulators, which enables it to act as an “ethical liquidity partner” in key global markets.
Since 2017, its algorithmic trading models have executed over 400 million trades, and it currently accounts for approximately 1% of all crypto spot trading volume globally. It has facilitated more than $400 billion in cumulative trading volume to date.
One of the most prestigious market makers on our list, Cumberland advertises institutional-grade liquidity” for hundreds of crypto markets. It’s primarily focused on traditional spot trading on centralized and decentralized exchanges, providing liquidity through its time-weighted price average or TWAP execution system, which maximized efficiency.
Cumberland offers spot market liquidity for numerous fiat-crypto pairs, including USD, EUR, GBP and JPY. It also supports crypto exchanges that offer crypto-centric derivatives such as crypto options for tokens like BTC and ETH. Its options liquidity services feature bespoke strike prices and expiry dates, making it flexible to the needs of its clients.
In addition, Cumberland supports listed options and futures. It’s mainly focused on supporting larger crypto projects, which may make it less suitable for newer crypto teams. It has been around since 2014, making it one of the oldest market makers in the industry. It’s a subsidiary of the traditional asset trading firm DRW, and boasts offices in the U.S., U.K., Japan and Singapore.
For crypto projects to succeed they must ensure there is adequate liquidity behind their assets to create a viable market. But this is all but impossible for new projects to achieve organically, which is why market makers and liquidity provision have become a key part of the crypto industry.
To sum it up, market makers make sure that crypto traders can always buy and sell digital assets at a fair and stable price, regardless of what it is. In doing this, they help to ensure traders and investors will always be able to exit a position, boosting confidence in the markets and helping to foster healthy ecosystem growth.
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Disclaimer: Analytics Insight does not provide financial advice or guidance on cryptocurrencies and stocks. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. This article is provided for informational purposes and does not constitute investment advice. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
