Making Markets: The Art of Crypto Liquidity

During the panel “Making Markets: The Art of Crypto Liquidity,” Yoann Turpin, Co-Founder of Wintermute, joined John Lagman, APAC Crypto & FX Workflow Specialist and Strategy Lead of Bloomberg, to outline Wintermute’s journey toward institutional-grade liquidity and to explain how the firm deepens liquidity across global crypto markets.

From beginner to world-class player

Wintermute has shown a significant transformation, starting with a 90% on-screen trading volume in 2021, but by 2024, the proportion of OTC (Over-The-Counter) trading had increased to 25%, this reflects the institutional investor’s shift towards a structural shift towards the market. Wintermute currently handles a trading volume of $36 billion per day, covering over 450 tokens, or about 10-15% of the global crypto trading volume.

• The Crypto Options market is still underdeveloped, accounting for only 1-1.5% compared to TradFi’s 25-30%. This is mainly due to the high leverage of Perpetual Futures and the lack of institutional knowledge.
• US Market Expansion: Wintermute opens its first office in New York and liaises with the US Crypto Task Force, while maintaining segregated operations with the Spot Trading team based in London and the Derivatives team in Singapore.
• Specialized Markets: The company also sees the crypto market split into DeFi/On-chain, which requires smart contract developers, and CeFi, which requires traditional Quant developers, with employees often unable to successfully transition across disciplines.

Unpacking Wintermute's challenges and adaptations

In a crypto world where traditional prime brokers don’t exist yet, Wintermute has adapted by raising funds directly from Family Offices and Hedge Funds, and sourcing inventory from Foundations, making market making in crypto completely different from traditional finance.

Institutional entry into the crypto market still faces structural challenges beyond regulation. Banks still struggle with 24/7 operations and lack of agile market access, meaning no direct market access or sourcing inventory through traditional prime broker relationships. However, trading of Structured Products by Private Banks and Family Offices can stimulate growth in the Options market, as every SP sale requires bank-level hedging.

Positive signs are that the new US administration has brought “fresh air” to crypto operations, with Wintermute meeting with the Crypto Task Force and finding them open to understanding the mechanics of DeFi.

Investment strategies in the digital asset era

Wintermute doesn’t just stop at being a liquidity provider, but also looks ahead to the innovations that will drive the future of the crypto market. Here are the key points:

• ETF Impact: For market makers, the impact of ETFs is secondary. Despite the $15 billion inflows, about $5 billion came from hedge funds rebalancing between spot BTC and GBTC, which had little impact on the price.
• Wintermute Ventures: The firm has invested over $200 million in 137-140 projects since 2020, focusing on crypto-related infrastructure and AI projects.
• CFDs on Crypto: CFDs (Contracts for Difference) have become popular in the crypto market, allowing institutions to gain exposure to crypto through familiar tools. This reflects the market’s evolving towards offering more TradFi-friendly APIs and interfaces.
• Anti-Manipulation: Wintermute has stood firm against price manipulation since 2018 and maintains low margins by investing in infrastructure.
• AI in Trading: The adoption of AI in trading still faces challenges, but in the future, AI Agents are likely to be more action-sensitive and will push trading volumes to Market Makers that offer the best prices.

Wintermute has also been a pioneer in incubating projects that the company would have built itself if it had not focused on market making, such as GMCI (an index company), B-bot, and Wildcat (a lending platform), demonstrating a strategic approach to developing an ecosystem beyond direct trading.

With a key vision that the tokenization of traditional stocks will force even non-crypto institutions to understand this technology, the challenge will extend beyond technical integration to include operational changes such as 24/7 market coverage that will reshape the financial infrastructure of the future.

Summary

Wintermute is emerging as a leading player in the crypto space, designing market structures and providing liquidity that truly meet the needs of institutional investors. Although the crypto options market is still small and faces limited knowledge and infrastructure,But Wintermute is developing new techniques and structures that are tailored to the specifics of the digital asset market, not just trading, but also investing in AI and infrastructure, expanding into the US, and pushing for new standards that systematically connect TradFi with the crypto world.Making them a key cog in driving the market towards more sustainable and professional growth.

Watch the full session on Youtube: https://youtu.be/UbC35dLGUUY?si=Rb510VCytGZdp0RU