2022 Crisis to 2024 Bull Run: How Market Making Evolved from Survival to Innovation - CLS Global Insights
The cryptocurrency market's dramatic transformation over recent years tells a compelling story of resilience and innovation. Daily trading volumes surged from $10 billion to $100 billion, but raw numbers only scratch the surface. What emerged wasn't just a recovery – it was a complete reinvention of market making.
The evolution of market making
The market downturn eliminated 40% of market makers, forcing survivors to revolutionize their approach. Traditional 0.1% spreads expanded to 1-2% as liquidity evaporated. Delta-neutral strategies, previously used by only 15% of market makers, became the industry standard as the landscape evolved.
"The traditional playbook stopped working when volatility hit 95% for major tokens," explains Filipp Veselov, CEO of CLS Global. "Market makers needed new solutions for unprecedented challenges."
The retail revolution
Then came an unexpected catalyst: meme coins. What started as a crypto curiosity became a force that revolutionized market making strategies. Traditional approaches, built for institutional trading, couldn't handle the unique challenges of community-driven tokens.
Market makers processing 100,000 orders daily now handle millions. Advanced algorithms reduced average slippage from 2.5% to 0.3% across major exchanges. The meme coin explosion tested these systems further, with daily volatility averaging 150%, requiring innovative risk management approaches.
Case study: How VIRTUAL grew from $28M to $1.68B
The transformation of market making strategies is perfectly illustrated by CLS Global's work with Virtuals Protocol (VIRTUAL), an AI-driven Metaverse project that experienced extraordinary growth in late 2024. VIRTUAL approached CLS Global in September 2024. The challenge wasn't just providing liquidity – it was preparing for explosive growth while maintaining market stability.
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