What is MM: The key factor of the cryptocurrency market

In the financial trading market in general and cryptocurrencies in particular, you often hear the terms “MM” or “Market Maker.” But what exactly is an MM, and why is it so important? This question is not only for professional investors but also for every participant in trading.

Market Makers in Crypto

Market Makers are not a complicated concept. Simply put, MM are entities that facilitate smooth market operation. They include large exchanges, major financial institutions, investment funds, and whales (holders of massive amounts of cryptocurrency). All these parties act as MM and participate in market making activities.

Essential Role: Liquidity and Balance

The main strength of MM lies in their ability to provide continuous liquidity. When you want to buy or sell a cryptocurrency, your order can be matched thanks to the presence of MM. Without them, the market would lack liquidity, making trading more difficult.

Additionally, MM profit from the bid-ask spread and trading fees. They help maintain price stability of a coin, ensuring orderly market operation. This creates a fairer playing field for all participants.

Challenges and Risks: When Power Becomes a Weapon

However, MM also pose significant risks. With enormous financial power, some MM can manipulate coin prices, especially newly listed tokens. They may “pump” prices to excite retail investors, then “dump” to cause prices to crash.

The phenomenon of “liquidity sweeping”—where MM clear out stop-loss orders of individual investors—is a difficult issue to resolve. Because MM are not tightly regulated by the government, they can exploit their information and power to gain unfair advantages.

Balancing Benefits: Are MM Necessary or Harmful?

The question is not whether MM should exist, but how to limit potential harms. MM provide liquidity, foster competition, and reduce risks by maintaining stable prices. At the same time, they can also withdraw funds from investors through sophisticated tactics.

Understanding what MM is and how they operate is the first step to protecting yourself. The cryptocurrency market will always have these powerful actors, but knowledge is your best weapon.