The role of crypto market makers is poorly understood: do they simply ensure crypto trades go through… or do they manipulate crypto markets?
Few ordinary crypto holders understand the role of market makers.
At the simplest level, market makers provide liquidity to keep assets tradable in the cryptocurrency market, ensuring that if a user tries to buy or sell a coin on a particular exchange, theyre usually able to.
However, unethical market makers also manipulate token prices, inflate volumes and conduct pump and dumps.
Many cryptocurrency projects hire them to goose their performance metrics using strategies like wash trading, which is where entities repeatedly trade the same asset back and forth to create the illusion of volume. In traditional markets, this is illegal market manipulation, misleading investors about the demand for a particular asset.