Crypto Market Makers vs Takers – What You Need to Know

In the crypto world, there are two kinds of people: those who make things happen and those who just show up. Enter market makers and market takers. One group builds the marketplace, keeps the lights on, and ensures your trades don't feel like a bad Tinder date where nobody shows up. The other? They just click "buy" or "sell" and hope for the best. 

Both roles are fundamental to how markets function, and understanding their difference can sharpen your trading strategies.

Read below to find out more about these two critical participants in the crypto trading ecosystem and how they influence the market based on real-world examples.

What Are Market Makers?

At the core, market makers are the liquidity providers of the market. Imagine a bustling market square where traders buy and sell goods. Without sellers who consistently bring products to sell, buyers wouldn’t have much of a reason to visit the market. That’s exactly what market makers do in the cryptocurrency world—they provide liquidity by placing buy and sell orders that other traders can interact with.

In more formal terms, market makers place limit orders. These are orders to buy or sell at a specific price, and they “sit” on the order book until a market taker decides to match the price. Without these limit orders, the market would stagnate, as there wouldn’t be a continuous flow of trades.

How Do Market Makers Work?

Market makers ensure that there's always someone available to trade with by posting both buy and sell orders at different price points. This brings liquidity (enough buying and selling volume) in the market, which is crucial for a healthy, functioning exchange.

For example, on a popular cryptocurrency exchange like Binance or Coinbase, a market maker might post a bid to buy Bitcoin at $30,000 and an offer to sell it at $30,100. Their goal is to profit from the spread—the small difference between their buy and sell prices.

Market makers are usually large institutions, hedge funds, or bots (algorithmic trading programs) that can handle large volumes of trades. In return for providing liquidity, exchanges often reward market makers with lower fees or rebates, which adds another layer of incentive to keep the order books flowing.

Real-World Example: Wintermute
Take Wintermute, one of the largest market makers in the cryptocurrency space. They use sophisticated algorithms to provide liquidity across multiple exchanges and are crucial in helping traders get in and out of positions with minimal price impact. Wintermute operates in various cryptocurrencies, ensuring the market remains liquid and spreads stay tight.

By doing this, they reduce volatility and ensure that retail traders—normal traders like you—aren’t left hanging without anyone to buy from or sell to.

What Are Market Takers?

On the flip side, market takers are traders who execute trades that match existing orders in the order book. They "take" the price that’s already set by market makers, which explains the name.

When you’re a market taker, you’re essentially placing a market order. Unlike a limit order where you specify the price, a market order gets executed instantly at the best available price. While this guarantees you’ll make the trade, it comes with a trade-off: you might pay a slightly worse price because you’re accepting the spread set by market makers.

How Do Market Takers Work?

Market takers are the traders who consume liquidity in the market. They do so by accepting the prices available for an asset, whether it’s Bitcoin, Ethereum, or any altcoin. When a taker’s market order matches a maker’s limit order, the trade is completed.

For instance, imagine you want to buy one Bitcoin and you're in a hurry. You place a market order on Binance. If the current lowest ask price (the price someone is willing to sell) is $30,100, your order will be executed at that price, even though you might have wanted to buy it for $30,000. The difference, however, is that your trade happens immediately.

Real-World Example: Institutional Investors
Consider large institutional investors who need to execute massive trades. They often act as market takers when they want to enter or exit a position quickly, without waiting for prices to move.

Suppose a hedge fund wants to buy $10 million worth of Ethereum. If they placed a market order, they would "take" whatever available Ethereum is being offered at the best prices, driving the price up as they consume available liquidity. While this is a necessary cost for urgency, it’s an expensive one due to slippage, especially in markets with less liquidity.

Maker and Taker Fees

Maker Fees

These are charged when you place a trade that adds liquidity to the market. In plain language, this means you’re placing an order that doesn’t get filled right away, like a limit order. Your order sits in the market, waiting for someone else to come along and match it. Since you’re helping to "make" the market by providing more options for other traders, you get a lower fee;  exchanges tend to reward you with lower fees for being patient and offering more trade options.

Example
Let’s say you’re selling Bitcoin and you want to sell it for $30,500, but the current market price is $30,000. Your order goes into the order book and stays there until someone agrees to buy it at your price. You’re helping increase the choices for other traders, so you’re rewarded with lower fees.

Taker Fees

These are charged when you take liquidity from the market. This happens when you place an order that gets filled immediately, like a market order. You’re not waiting around for a match—you’re snapping up whatever’s available at the current price.

Example
You decide to buy Bitcoin right now at the market price of $30,000. You place a market order, and it gets filled immediately by someone’s sell order already sitting in the order book. Since you’re removing liquidity (taking away an available trade), you pay a higher fee for the convenience of an instant trade.

Because you’re taking liquidity out of the market, exchanges typically charge more for these trades. The higher fee compensates for reducing the number of available orders in the market.

Key Differences Between A Market Maker and A Taker
 

In a nutshell, if you’re willing to wait and place limit orders, you can save on fees as a maker. If you’re in a hurry and want your trade done ASAP, you’ll pay a bit more as a taker.

Makers’ and Takers’ Influence on Crypto Prices

Makers add liquidity to the market and stabilize prices. More orders in the order book can absorb large trades without causing significant price swings. Additionally, increased liquidity from makers deepens the market, making it harder for large trades to move prices significantly.

On the other hand, takers place market orders that remove liquidity from the market. Large taker orders can cause price movements, especially in markets with low liquidity. For example, a large buy order can push prices up, while a large sell order can push prices down.

High taker activity can also increase market volatility, as immediate trades can lead to rapid price changes.

Why This Matters for Your Crypto Strategy

Understanding whether you are a market maker or a market taker (or both, depending on your strategy) is key to minimizing fees and maximizing profits.

Apart from fees, here are a few ways this distinction could influence your approach to trading:

• Slippage – if you’re a market taker, the price at which your order is executed might not be ideal, especially in volatile markets. This is known as slippage. While market makers take their time to have their orders filled at their preferred price, takers risk paying a premium for speed.
• Market impact – as a market taker, large orders can create noticeable shifts in price (market impact), whereas market makers can mitigate this risk by slowly adding liquidity over time.
• Liquidity pools and DeFi – if you’re into decentralized finance (DeFi), platforms like Uniswap allow users to act as liquidity providers (essentially market makers). In exchange, they receive compensation from the transactions that take place within the pool. This has become a popular way for retail traders to “become the market maker,” offering liquidity and earning profits over time.

Pros and Cons of Being a Market Maker or Market Taker

Market Maker
 

Market Taker

Automate Your Maker or Taker Strategy with Altrady’s Bots

For Makers

• Set up limit orders: configure the bot to place limit orders at specific price levels. This helps you add liquidity to the market.
• Grid Bot strategy: use the Grid Bot to place multiple limit orders above and below the current market price. This strategy can help you profit from market fluctuations while adding liquidity.
• Rebalance: set the bot to periodically rebalance your portfolio by placing limit orders, ensuring your assets are allocated according to your desired strategy.

For Takers

• Place market orders: configure the bot to execute market orders based on specific triggers, such as price movements or technical indicators. This allows you to take advantage of immediate trading opportunities.
• Use Signal Bot: get real-time alerts based on market conditions and technical indicators and act quickly on trading opportunities. This helps you execute trades when certain signals are triggered, ensuring you don’t miss out on potential profits due to delays.
• Use Stop-Loss and Take-Profit: set the bot to automatically execute stop-loss and take-profit orders to manage risk and lock in profits.

The Bottom Line - The Tug of Liquidity

In the grand scheme of things, market makers and market takers are two sides of the same coin. Market makers provide the liquidity that makes it possible for takers to execute their trades. Takers, in turn, drive market activity by creating demand for liquidity.

Both are crucial to the ecosystem, but your role will depend on your trading goals and how you want to engage with the market. Are you looking for fast trades, or are you more interested in controlling price points and minimizing fees? The answer to that question will determine your approach to crypto trading.

Understanding these roles not only improves your trading experience but can also give you an edge over the competition. So the next time you place a trade, take a moment to think: are you making or taking?