The role of Market Making system in the cryptomarket trading.

3 min readJul 12, 2019

There are two sides of Market Making system in the cryptocurrency trading process. Good side is like unregulated crypto laws in the most countries, wide availability of exchanges, high volatility instead the tradition financial markets and the bad ones such as wash trade in game, fake volumes on cryptoexchanges, ICOs/shitcoins/scams etc. In all of this mess is good to know how exactly working Market Making system/service on the various cryptotrading platforms before cryptomarket will get regulation from G20 countries such as traditional financial trading world (like forex, stocks, futures).

Firstly let’s take a look on the description of Market Making system – main activity is to create “natural/(live)” market for both buyers and sellers by placing multiple limit orders in order books oncryptoexchange. Here is one more description: Market Maker (MM) is an individual market participant or member firm/trader of an cryptoexchange that also buys and sells altcoins for its own account, at prices it displays in its exchange’s trading system, with the primary goal of profiting on the bid-ask spread, which is the amount by which the ask price exceeds the bid price a market asset. So as mentioned above — one of the main MM activity is to drive volumes from buy to sell order books (and vice versa) for creating looks like “live” market for exactly altcoin and the main goal of course is luring traders into current trade for maximizing liquidity and rising trading volume. While the most countries ain’t regulating cryptotrading process– in case of using MM system/service there are still be existing fake altcoins pumps which is simply supporting, as example, by shilling campaigns (such as you can view from Justin Sun on Twitter and correlate price of his project BitTorrent Token $BTT in exactly period).

You need to know that MM is powered by trading bots — algorithms which is monitoring markets of their clients and enabling when this is needed for managing the book orders, driving volumes from buy order book order to sell order book and contrariwise. This programs have specified it’s own trading volume to manage while trading(which is buying/selling activity whole trading day), secondly it has the main goal – such as starting pump campaign or just holding some necessary price level for altcoin and thirdly it’s monitoring prices spread (difference in % between buy and sell walls) in altcoin for pricing equalization between the various cryptoexchanges to prevent arbitrage…


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