Cryptocurrency exchanges have been increasingly featuring market makers, but do they create conflicts of interest? Craig Erlam, a Senior Market Analyst with OANDA, believes that while the market remains optimistic that BlackRock will be successful with its application for a Bitcoin spot exchange-traded fund, Bitcoin still looks vulnerable. Bitcoin ended last week quite positively after dropping to three-month lows on Wednesday, but it continues to look vulnerable to further declines, Erlam said. The two-month trend is not in its favour, and the news flow isn’t exactly helping the situation either. It’s had a remarkable year and remains more than 50% higher, so it’s hardly a dire situation.
Crypto.com has joined the club of crypto exchanges that operate an internal market maker, the Financial Times reported Monday. Market makers are entities that use their own capital to facilitate the trade of tokens on exchanges by taking the counter position on a trade, allowing investors to rapidly exit positions without a counterparty at the other end. Crypto.com told the FT that We have an internal market maker that operates on the Crypto.com exchange, and that internal market maker is treated exactly the same as third-party market makers that identically facilitate tight spreads and efficient markets on our platform.
Erlam still thinks there’s a bull case for Bitcoin, it just hasn’t been realized yet. The recent downturns, he argues, are simply a correction phase within an overall optimistic bull market. However, there’s little evidence indicating any imminent improvement, especially considering the Securities and Exchange Commission’s intensifying scrutiny of major exchanges, he concluded.