Guide · Basics
What Is a Market Maker? The Entities Behind Every Buy and Sell
Every time an order fills almost instantly, there's usually a specific kind of participant on the other side making that possible — one whose entire business model depends on never having a strong opinion about where price is headed.
A market maker is a trading firm (or, in crypto, sometimes an automated system) that continuously places both buy and sell orders for the same asset, profiting from the small gap between the two — the bid-ask spread — rather than from betting on which direction the price moves. Their job, in effect, is to always be willing to trade with whoever shows up, in either direction.
This constant two-sided quoting is what actually creates liquidity: without market makers standing ready on both sides, a buyer might have to wait for a matching seller to show up organically, and prices could swing wildly on even modest order sizes simply because there's no one absorbing the other side of the trade. Market makers profit from volume and frequency of trades rather than from directional conviction, which is why they aim to stay roughly neutral — flat — on their own net exposure as much as possible.
This is also why market maker activity tends to be most visible exactly when it briefly disappears: in a genuine panic or a flash crash, some market makers widen their spreads dramatically or pull their orders entirely rather than absorb one-sided, high-risk order flow, which is part of why liquidity can evaporate precisely during the moments traders need it most — a mechanical, structural reason behind sudden price gaps, not necessarily a conspiracy or manipulation.
Understanding that a 'market' isn't a single counterparty but a layer of participants with their own incentives — some directional, some purely liquidity-providing — is useful context for reading why the spread on a given asset in Trade2Spike's Spot mode sometimes widens during high-volatility windows, even with zero artificial markup added on top.