Market Maker

A market maker is a firm or trader that continuously quotes both a buy and a sell price for an asset, earning the spread between them while supplying liquidity to everyone else. On major bitcoin pairs at large exchanges, competitive market making keeps spreads to a few basis points, hundredths of a percent.

Why it matters

Without market makers, buyers and sellers would have to find each other directly and order books would be thin and erratic. Makers bridge time, standing ready to trade when the natural counterparty has not arrived yet. Their compensation is the spread, and their risk is inventory: holding an asset that moves against them between trades. In fast markets makers widen quotes or withdraw, which is why liquidity evaporates exactly when it is most wanted.

Professional firms dominate the role in crypto, often under formal agreements with exchanges and token issuers that specify minimum quoting obligations.

In the gold vs bitcoin debate

Gold's market makers are the bullion banks quoting in the London over-the-counter market, an institutional franchise largely closed to outsiders, while retail gold buyers face dealer spreads on coins that often run several percent. Bitcoin compresses that hierarchy: the same electronic books serve institutions and individuals, and spot spreads for small orders are usually a rounding error by comparison.