The post The problem of market making in the crypto sector appeared on BitcoinEthereumNews.com.

Operating in the crypto markets involves not only retail and whales, but they are also managed through market making services. These are essential liquidity providers that facilitate efficient trading by constantly maintaining both buy and sell orders.  Their role is to ensure high liquidity, reduced spreads, and stable prices in the crypto markets, thus facilitating efficient trading by continuously and consistently maintaining buy and sell orders. How market making works The service of the brands also exists in traditional markets, so much so that even before Bitcoin was born, in 2008, there were already more than two thousand in the USA, and even more than one hundred in Canada. Technically, they are companies or individuals who simultaneously place both buy orders and sell orders for an asset held in inventory in the hope of making a profit on the difference, called the bid-ask spread or turn. The result is a certain stabilization of the market, and above all, a certain reduction in volatility, as they effectively set a price range for the asset. The same SEC (Securities and Exchange Commission) in the USA defines “market maker” as companies ready to buy and sell shares on a regular and continuous basis at a publicly quoted price.  For example, in the currency market (the forex), most trading companies are market makers, which buy foreign currency from clients and resell it to other clients. They gain profit from the price differentials of trading (the spreads), in exchange for the continuous provision of liquidity to the market, the reduction of transaction costs, and the facilitation of exchanges. In other words, they do not buy and sell to resell or repurchase later at higher or lower prices, but they buy and sell simultaneously at different prices, earning on the difference.  In their absence, trading would…

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Filed under: News - @ March 8, 2025 8:22 am