Whenever you buy, the price drops; whenever you sell, the price rises, making it feel like there's a website monitoring you. Any market follows the 28 principle: 80% of investors' returns are destined to underperform the market, meaning Bitcoin. Where did the money go? Due to binary thinking, the market generally believes that the money has been harvested by the market makers, and they are the culprits of their own losses.
The term 'market maker' has thus been continuously demonized and mystified; they are seen as omnipotent, dominating the market. Discussions about market makers have never ceased for even a second, and 'overthrowing the market maker' has become the common goal of all investors.
So, is there really such a thing as a 'market maker' in the crypto space?
Let’s be clear: there are definitely market makers, but they are not the kind we typically think of. The term market maker is no longer suitable for the current crypto market; a more accurate term now is major funds.
Types of Market Makers in the Crypto Space
Altcoin Market Makers:
Altcoins or new coins have small circulating volumes and highly concentrated chips, often with one or two addresses controlling a large portion, even over 90%. Therefore, when altcoins surge, the magnitude is astonishing, which is the fundamental reason for people's obsession with altcoins. The market makers of altcoins are also the ones that fit the image of market makers in people's minds.
Mainstream Coin Market Makers:
Here, mainstream coin market makers also include Bitcoin. These coins have a long development time, and circulating chips are constantly being dispersed. The scale is larger, and it is almost impossible for a single market maker to control the majority of the chips; the number of competing forces is gradually increasing. Additionally, mainstream coins have leverage for short selling and futures trading, making price fluctuations and directions more reasonable and stable compared to altcoins.
Regarding the market makers of different similar coins, it is worth mentioning that many people believe that coins with highly controlled markets are best when one person controls the vast majority of the chips, as these coins can achieve short-term returns of tens or hundreds of times. This is a typical case of only seeing the thief eat meat but not seeing the thief get beaten; trying to earn high profits from such monopolized coins is like licking blood from a knife's edge, snatching meat from a wolf's mouth.
Of course, this is also a relative concept; within the altcoin community, there are indeed some truly promising dark horses. As their market capitalization continues to grow, they can ultimately join the ranks of mainstream coins. Therefore, mainstream coins also represent the future of certain altcoins. Ultimately, with the ongoing development of the crypto market and the involvement of regulation, the scenario of a single dominant player will gradually become a thing of the past, and the future will be characterized by a multi-player game and collaboration.
Wyckoff Thinking: Tracking the Footsteps of Market Makers
Richard Wyckoff was a pioneer of technical analysis in the stock market in the early 20th century. He, along with Dow, Gann, Elliott, and Merrill, is considered one of the five giants of technical analysis. What attracts me most about Wyckoff thinking is that he approaches price fluctuations from the perspective of the major players (market makers), while various indicators based on price fluctuations are merely market phenomena. Major players often deliberately create various buying and selling indicator traps to earn profits from retail investors.
Speculative trading is the most challenging job; on one side, there is our own human greed and fear, and on the other side, there are powerful funds that skillfully manipulate public psychology. To survive in the cryptocurrency market, we must grasp the behavior patterns of the market itself, which means gaining insight into the behavior of major funds, allowing us to respond to changes with stability. The essence of the Wyckoff method is the study of market manipulation forces.