Market makers are an essential component of the cryptocurrency market, but what exactly do they do? Focus on the many roles of these key players in the crypto world.
https://cryptoast.fr/qu-est-ce-qu-un-market-maker-crypto/
What is a market maker?
A market maker (or market maker in French) is an entity that provides liquidity to a financial market by standing ready to buy or sell securities or other financial instruments. In the context of the cryptocurrency market, market makers perform a similar role by standing ready to buy or sell large volumes of a particular crypto, often at prices slightly above or below the prevailing rate.
Market makers are important to the cryptocurrency market because they help to ensure that there is always an available buyer or seller for a given cryptocurrency, which maintains market liquidity. Without them it would be more difficult for traders to find buyers or sellers for their cryptocurrencies, which could lead to lower market efficiency and liquidity.
In addition to providing liquidity, market makers also help reduce market volatility by actively trading and adjusting their bid (bid) and ask (ask) prices in response to changes in supply and demand. By doing so, they can help smooth price movements and make the market more stable.
Often, companies involved in market making offer a range of other services related to cryptocurrencies
An over-the-counter (OTC) brokerage and trading service; Custody of assets; Cash management.
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The powerful tools of market makers
Market makers use specialized software and algorithms in order to help them make transactions and adjust their prices according to the evolution of the market. These software can be very sophisticated and use complex algorithms and data analysis.
For example, market makers may use software that monitors changes in supply and demand in the market and automatically adjusts their bid and ask prices accordingly. They can also use tools that help them identify trading opportunities at different price levels or hedge their positions to minimize risk.
Here are some of the key features that such specialized market making software might include:
Real-time market data; Fully automated trading; Risk management tools; Extensive order management.
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Some examples of market makers
Flowdesk
French company founded in 2020, Flowdesk has developed a trading infrastructure that integrates over 70 centralized and decentralized exchanges. Flowdesk offers a “Market Making as a Service” service by providing token issuers with a trading infrastructure and a team of traders. This makes it possible to ensure broad coverage of the latter’s needs in terms of market making.
Woorton
French company created in 2017, Woorton has become a major player in market making, serving hundreds of third parties around the world and providing liquidity to all cryptocurrency market participants. With its tools, Woorton ensures the provision of liquidity to support the uninterrupted functioning of the cryptocurrency market, which enables its partners to buy or sell any crypto under any market conditions.
GSR
British company founded in 2013, GSR is one of the oldest active market makers in the cryptocurrency industry. GSR offers its many clients an institutional quality software suite, GSR Markets. This makes it possible to manage in a very thorough way all that includes the liquidity of the markets.
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Conclusion on market makers
To sum up, market makers play a crucial role for the cryptocurrency market in many ways :
They bring liquidity to cryptocurrency pairs and depth to order books; They make it possible to attenuate sudden price fluctuations; They contribute to the fair fixing of prices. ; They help to reduce the spread on the exchanges, namely the gap between bid and sell orders in the order books.
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Editor-in-chief of Cryptoast, I discovered Bitcoin and blockchain technology in 2017. Since then, I have been striving to share quality content so that the sector becomes more democratic for everyone.
Clement Wardzala
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