Market makers: The core building block of the bitcoin trading ecosystem

The crypto market is highly fragmented, and a recipe for chaos and arbitrage. Market makers are the watchdogs of this market, creating order where disorder is inevitable by allowing efficient prices across exchanges and other trading venues.

They are incentivized and rewarded through spreads, getting paid to fill up order books, and have bundles of capital ready to deploy on the tiniest arbitrage opportunities.


This blog post is an extract from our latest report: “The Bitcoin Trading Ecosystem”.


In its early days, the market making in crypto was poor and thin order books led to high slippage and poor infrastructure. Close-ended exchanges made it difficult for arbitrageurs to indulge in price dislocations.

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The Bitcoin Trading Ecosystem - And The Emerging Institutional Infrastructure

Bitcoin has come a long way since the early days of relative obscurity. The evolution is fuelled by a flood of institutional money, both around the infrastructure but also directly into the asset.
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Research
Jun 24th 2021