Since the advent of blockchain technology, the conventional financial market has undergone a permanent transformation. The interest in cryptocurrencies is growing daily, and until it is too late, everyone tries to enter the market. The market is indeed saturated, which will certainly annoy many cryptocurrency newcomers.
Regular traders benefit from the variety of investing opportunities available to them, which is a good thing. From a business standpoint, startups find it challenging to thrive in the present market environment because of the high standards, skilled competitors, and fussy investors in the cryptocurrency field.
Every day, dozens of innovative cryptocurrency ideas emerge, but only a select few of them get traction and expand. One trait that successful firms have in common is the presence of a crypto market maker.
Who Is a Market Maker and What Is Its Role?
The market makers are the middlemen who execute trades on cryptocurrency exchanges. They make a profit by taking a cut of the price spread for each trade.
Market makers play a crucial role in providing the liquidity that keeps cryptocurrencies moving. They are responsible for attracting buyers and sellers to crypto trading platforms. They typically start by submitting the highest bid and lowest ask. The difference between these bids and asks is called the spread. When this spread becomes too large, the market becomes less liquid. Market makers actively place orders in order to maximize profit, reduce the spread and maintain liquidity.
The “invisible hand” of the cryptocurrency market maker ensures that the market is fair for all parties involved. Market makers are used by all successful token initiatives and exchanges, and their demand will only increase as the cryptocurrency market develops. Without a market maker, ICO/IDO/IEO tokens cannot live. Since there is a very significant chance of losing all savings, having no liquidity partner is a huge warning sign for the majority of investors.
The Problems With Low Liquidity Tokens
It is well known that all coins that have recently listed lack liquidity. Investors only notice the project’s wide spreads, extreme volatility, minimal trading volume, and significant slippages; this makes the entire endeavor appear fraudulent. A situation like this brings up another problem: the possibility of price manipulation.
Token investors have the opportunity to benefit by selling listed assets as soon as the project is listed because their value can increase by 5X, 25X, or even 100X in comparison to the price at which they were originally purchased. These frantic sales have a negative impact on the project’s reputation and are difficult to reverse. The price of a coin with low liquidity can occasionally be crushed by just one large order when trading volume is low.
How Does A Market Maker Help Your Project?
Managing Token’s Liquidity on CEX
Centralized cryptocurrency exchanges closely resemble those seen in the traditional market. The following are the duties of the market maker when your project is listed on CEX:
- Managing the order book. The bid and ask prices are constantly quoted by cryptocurrency market makers, ensuring that orders are filled quickly and accurately.
- Purchase facilitation. The presence of a market maker instantly increases traders’ and investors’ faith in the tokens’ long-term stability and worth, which motivates both parties to fund the project.
- Support for tokens’ prices and trade volume. Market makers assist cryptocurrency projects in maintaining high liquidity levels, which ultimately leads to maintaining crucial price levels, narrow spreads, and a stable trading volume on one or more markets.
Managing Token’s Liquidity on DEX
The market making services we detailed in the section above are not a mirror image of what is offered on decentralized bitcoin exchanges. Since DEXes are constructed entirely differently, they demand a special market making approach:
- Setup and control of liquidity pools. The task of establishing and overseeing the functioning of liquidity pools is to ensure that they draw in a growing number of investors. For all trading pairings, the company also offers technical support, enabling trade execution with less slippage.
- Price maintenance.One of a market maker’s primary objectives is to safeguard the token from pumpers and dumpers.
- Trading volume assistance. The strong technology and algorithms maintain a steady trading activity to highlight the project’s strength.
BitQuant – A Leading Market Maker and Liquidity Provider
By laying a strong basis for the long-term success of your token, BitQuant Capital makes sure you don’t make any mistakes.
BitQuant Capital is a cryptocurrency market making team of experienced algo traders with a comprehensive background in market making, liquidity provision, and liquidity management for digital assets and exchanges.
Since we’ve been in business in 2019, we’ve had both achievements and setbacks, but we’ve also learned from both. As of right now, we successfully released 12 coins and have been giving them 24/7 liquidity ever since.
We have established connections with numerous liquid cryptocurrency exchanges, such as Binance, Gate.io, KuCoin, and others.
We are more than prepared to establish a fair and liquid environment to hasten the growth of your cryptocurrency firm thanks to our robust technology and years of experience.
Get in touch with our professionals right away!
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Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.